Beverley Hughes: Myplace will transform the lives of thousands of young people in Blackpool, as it will those of tens of thousands of other young people across the country. Through £272 million of investment during 2008 to 2011, myplace is delivering world-class facilities for young people driven by the active participation of young people themselves. Last week, I announced the second tranche of £180 million for 41 superb projects across the country, including £4 million for the Blackpool youth hub.

Andrew Pelling: I thank the Minister for that answer. On academy plans for Croydon, what attention will he pay to the capture and continuation of the best of the predecessor schools, and to transferring any good traits to succeeding academies? I am thinking especially of Haling Manor high school, which has just been named the most improved school in London by the Specialist Schools and Academies Trust. What consideration is given to minimising disruption, for example in the case of Ashburton junior and infant schools, which have already been subject to a destabilising merger with another primary school? There were also three different succeeding plans and proposals for amalgamation on the Ashburton community school, creating an all-the-way-through, four-to-18 school. That is an important issue for my constituents—

Robert Goodwill: The administration of the scheme has been a nightmare for sixth-form colleges. At Scarborough sixth-form college, more than a third of the 1,100 students have applied for EMAs and there have been problems. The college has tried everything. It has brought in additional admin staff on a Tuesday, the payments day, and staff have even worked in the evenings and at night to try to get on the website. Despite that, they have had to advance over £1,000 each to 20 students, and the allowances for four students are still outstanding. May we have an apology from the Minister to the staff who have had to deal with the scheme and, more particularly, to the students from those lower income households, who are just the people whom the scheme was meant to help?

Sarah McCarthy-Fry: We are committed to ensuring that all young people between the ages of 16 and 18 have the opportunity to go on to further education and get they qualifications that they can. We are certainly committed to helping young people with learning difficulties and disabilities to do that, too.

Sarah McCarthy-Fry: The problem is that the more flexibility that we put into the system, the more complex it becomes. I understand the hon. Gentleman's point, but there will not always be the same number of young people in the 16-to-18 age group. It is that particular age group that we are trying to attract with the education maintenance allowance.

Michael Gove: We all acknowledge the debt that we owe to Lord Dearing. However, it is also the case that the catastrophic fall in the number of students taking modern languages at GCSE has followed this Government's policies.
	The Minister will be aware that last week Manchester grammar school became the latest school to abandon the GCSEs for which he is responsible to opt for the independent international GCSE, or IGCSE. The Minister says that he is satisfied with exam standards, but clearly those with the freedom to escape his strictures are not. In GCSE biology, candidates are asked: "Which is healthier, sausages in batter or grilled fish?", while IGCSE science is rated by the Government's own officials as broader and deeper, with content comparable to an AS-level. Why will he not fund state students to do these rigorous exams? Is he happy with educational apartheid?

Sarah McCarthy-Fry: I thank my hon. Friend for her question; it echoes the Westminster Hall debate that we had on certain schools in London which are facing similar problems. I would be happy to offer to meet my hon. Friend and her local authority to discuss how we can take this matter forward. The problem arose because in the past, local authorities requested certainty about their forward funding, and we gave them three-year certainty on capital funding. We do not hold funds back because those authorities asked for that consistency and certainty. Some local authorities have been able to manage within that and some have not. If there are exceptional circumstances, I would be happy to discuss them with my hon. Friend.

Sarah McCarthy-Fry: I refer the hon. Gentleman to Sir Jim Rose's interim report and to the comments that he has made where he clearly states that it is not a question of discrete subjects not being taught. However, they will be taught within areas of learning in order that young people can have a deeper understanding as to how those subjects fit together. The final report will be published at the end of this month, and I am sure that the hon. Gentleman will be looking forward to what is in it.

Sarah McCarthy-Fry: I assure my hon. Friend that our testing and assessment regime at the end of primary school is not set in stone, which is why we have an expert group to advise on our assessment processes. We are piloting single-level tests, testing when children are ready. The best schools achieve without having to hot-house or "teach to the test", as people say, which is why we have asked our expert group to look at this matter, and I am sure that my hon. Friend will be interested in their report.

Edward Balls: The child health strategy made clear not only the overall total, but the allocations to every primary care trust. It is important now to ensure that the money is spent. With Contact a Family, we are funding a parents' forum in every area to ensure that parents are consulted about how the money—DCSF and Department of Health money—is spent. The best way of ensuring that the money is spent is to maintain our commitment to budgets in 2009-10 and 2010-11. To be honest, the £300 million planned by the Conservative party would mean cuts in that budget.

Beverley Hughes: Baroness Delyth Morgan, the Under-Secretary responsible for the matter, holds regular, quarterly meetings with CAFCASS to review the progress of its work. Her last meeting with the organisation was held on 10 February.

Jim Knight: The comments that the hon. Gentleman has made cause me some concern. Those pupils should not be left at the back of the classroom; they should be getting the attention and the language support that they need. I referred in an earlier answer to the around 100,000 extra teaching assistants whom we have now deployed in classrooms in secondary schools alone. In many areas they are being used, alongside others, to give individual attention to exactly those sorts of pupils and to give them support with their language. I remember visiting an excellent primary school in South Swindon, where a range of teaching assistants was being used with an intake where well over 30 different languages were being spoken at home. Those teaching assistants were being deployed excellently. The money is there; it just needs to be used properly.

Edward Balls: Faith schools play an important role in our education system, in both the maintained and the independent sectors. I have today asked Ofsted to carry out a survey of independent faith schools to ensure that the 2003 regulations for the spiritual, moral, social and cultural development of pupils which independent schools are required to meet are fit for purpose in preparing children and young people for life in modern Britain. I am confident that the vast majority of such schools are exemplary, but it is important that we work with the sector to achieve high standards in every school.
	In addition, I can tell the House that we have today approved 10 new national challenge trusts, which will raise standards in 11 schools, in Bradford, Essex, Lancashire, Lincolnshire, north-east Lincolnshire, Nottinghamshire and Warwickshire, and five new academy projects, in Liverpool, Rotherham, Somerset, Medway and Outwood Grange school in Wakefield. That brings to 101 the total number of academy projects approved since the DCSF was created.

David Taylor: The House might have missed this weekend's leap of faith in Harrogate, which was forced on the self-confessed agnostic leader of an obscure political sect that has called for more state-funded Church secondary schools. Damascus, eat your heart out! How will my right hon. Friend reform the unacceptable admissions criteria that are at present used by far too many such exclusive institutions? As the recent Runnymede Trust report found, those criteria tend to preserve privilege rather than fulfil their claimed role of challenging injustice.

Edward Balls: My hon. Friend will have to wait just a few days for the answer to that question. We will make an announcement on the new specialisms in the next few days. The reason why the school in his constituency is right to want to choose that specialism is that for the third year running, sports specialist colleges have seen the fastest rises in their maths and English results of all the specialisms, because of the way in which they use the aspiration and achievement of sport to motivate their pupils to learn. I cannot give my him an answer today, but I very much hope that his school will be successful.

Philip Davies: A number of head teachers and other teachers in my constituency have asked for it to be made easier to get rid of poorly performing teachers. What assessment has the Secretary of State made of the number of poor quality teachers in our schools, and what is he doing to ensure that schools can get rid of them, so that they do not damage the ethos of the school or the education of the pupils?

Jim Knight: The assessment that we have of the quality of teaching in our schools comes from Ofsted, which reports very favourably about it. It has said that we have the best generation of young teachers that we have ever had in our schools. As I said earlier, we now have an extra 23,000 of those high quality teachers in our secondary schools alone. We are always looking at ways of attracting new teachers, and I am pleased that we have had a 30 per cent. increase in the number of people applying to become science teachers. That is an extremely positive development. The hon. Gentleman might also know, if he reads  The Times Educational Supplement, that there has been a bit of a debate about the number of head teachers who have been dismissed recently. As I commented in that article, the most important thing when teachers or head teachers are moved on is to ensure that the right ones are moved on, and that we hang on to the vast majority who are doing a really good job for the children of this country.

Sarah McCarthy-Fry: We are continually updating our admissions code in the light of information we receive. All maintained schools have to comply with our admissions code, including maintained safe schools, and with the judgments of the independent adjudicator.

Andrew MacKinlay: May I take the Secretary of State back to the issue of pupils in disadvantaged areas, particularly in Tilbury in my constituency, which had two failing schools that we were proud to have replaced by the Gateway academy? Now, children from Tilbury cannot get into the Gateway academy: it was created and built for them, but now that it is a successful school, more than 40 applicants are being excluded. Does he have any powers to intervene on this nonsense, where we are disadvantaging those who are most deprived, for whom this school was primarily planned?

Shaun Woodward: With permission, I would like to make a statement about the horrific attack last Saturday at Massereene Army base in Antrim.
	The focus for that sickening crime was civilians and young soldiers of 38 Engineer Regiment, part of 19 Light Brigade. The House will know that Operation Banner—the deployment of troops in Northern Ireland—was brought to an end in July 2007. 38 Engineer Regiment is part of the Northern Ireland garrison. Those men and women are part of the new arrangements in which soldiers are based in Northern Ireland for deployment anywhere in the world. The arrangements are not about a garrison to replace Operation Banner.
	Those soldiers were in the process of being deployed for active service in Afghanistan, to support international efforts to stabilise and bring peace to that region. At the time of the attack, most of their colleagues had already left for that deployment. A small number remained, awaiting their deployment to begin within hours. While waiting, a small number of soldiers decided to order food from Domino's Pizza in Antrim. At about 9.40 in the evening, the delivery arrived in two separate cars. The soldiers came out of the main gate of the barracks—the cars delivering the pizzas were parked less than 10 yd away—and as they did so, two masked gunmen opened fire. The initial volley of shots was followed by a second. The attackers were clearly intent on killing both the soldiers and the civilians. They continued firing even when the men were injured and when some had fallen to the ground. The firing lasted for more than 30 seconds. More than 60 shots were fired.
	Neither the soldiers nor the civilians had a chance against that premeditated attempt at mass murder. Two of the soldiers were killed. The families were informed yesterday, and this morning the Ministry of Defence released their names. Sapper Patrick Azimkar and Sapper Mark Quinsey were held in the highest regard by everyone in their regiment. Patrick Azimkar was just 21. He was looking forward to facing the challenges of his first operational tour in southern Helmand. Mark Quinsey, who was 23, was equally looking to the operational challenges he would face in Afghanistan.
	Two more soldiers were seriously injured. The attack on the civilians from the pizza company was just as barbaric. Both were injured, one extremely seriously. There can be no doubt that those responsible were intent on taking the lives of all these men.
	I know that the House will want to join me in expressing our deepest condolences to the families of those who were murdered, and to send our sympathy to the injured and all the families who are also victims of this act of terrible violence, which has rightly been described as evil.
	Immediately after the attack, fellow soldiers from 38 Engineer Regiment went to the aid of their friends. They tended the wounded and cared for the dying. I had the honour of meeting some of those young men and women immediately after the attack yesterday morning. This morning my right hon. Friend the Prime Minister flew to Northern Ireland, and with him I again met that group of outstanding young soldiers. Let me put on the record the admiration that we all have for those young men and women. They are the greatest credit to our country, and I know that I speak for the whole House in saying how proud of them we are.
	It is now the job of the Police Service of Northern Ireland to conduct the investigation to bring those who murdered and injured these soldiers and civilians to justice. A major investigation is under way. This morning both the Prime Minister and I had further briefings from the Chief Constable, Sir Hugh Orde, from our intelligence advisers, and from Brigadier George Norton, commander of 38 (Irish) Brigade and the Northern Ireland garrison.
	The House will wish to know that everything is being done that can be done. It is too early for me to report on the progress of the criminal investigation. However, I should tell the House that yesterday evening the so-called Real IRA claimed responsibility for this act of extreme barbarism. Whatever self-styled name these murderers choose to use, the House will correctly recognise them as barbaric criminals prepared to carry out an act of pre-meditated mass murder—callously murdering innocent people going about their daily business. They are simply brutal and cowardly killers. It is true that the number of people who make up these criminal groups are relatively few, but they are no less dangerous for their small numbers. We know that they have no community support whatsoever, but their guns are able to murder.
	The police have asked for everyone in the community who has information to come forward, and they should do so as a matter of urgency. Anyone in the Antrim area or beyond on Saturday who may have seen anything suspicious, in the vicinity of Domino's or on the Randalstown road close to Massereene Barracks, should contact the police.
	The House will want to know that all political leaders and political parties in Northern Ireland have condemned this evil act. They are united not only in their condemnation and in their expressions of condolence to the families, but in their demand that anyone who can help should come forward. They join in those expressions with my right hon. Friend the Prime Minister and all the party leaders in this House, and they join today in a statement from all the Churches in Northern Ireland condemning the violence and asking those who can help the police to come forward.
	It is right for me also to record the expressions of support and sympathy that we immediately received from the Taoiseach and President McAleese, from the United States Secretary of State, Hillary Clinton, and from President Obama, who last night made his position very clear, condemning the attack in the strongest terms and making clear his support for the people of Northern Ireland—those people who have chosen a future of peace.
	It may be helpful if I take this opportunity to provide the House with further information about the current levels of security threat in Northern Ireland. As the House will know, both the Chief Constable and I have made public our view that the level of threat posed by dissident republicans has recently been higher than at any time in the last six years. Since 2008 they have mounted 18 attacks, 15 last year and three so far this year.
	The House will be aware that last week the Security Service raised the level of threat from Irish-related terrorism from substantial to severe in Northern Ireland. That was a carefully calibrated decision, based on an overall assessment of the last nine months. That period includes the attempted murder of police officers, including one savage attack on a police officer who had just dropped his child at school. Five bullets were put into the man's chest. There was some uncertainty last week about the wisdom of raising the threat level. I believe this was the right decision and entirely justified.
	Policing in Northern Ireland enjoys the highest levels of confidence from the public. In my judgment, it is absolutely essential that the Chief Constable has operational independence. Of course, he is accountable to the Policing Board under the Patten arrangements. He will, if he sees fit, enjoy the same rights as any other chief constable in the UK to request further technical back-up, if so needed; that would be the case in, say, a chief constable dealing with a threat from al-Qaeda and any international terrorism. Indeed, we made that clear at the end of Operation Banner. In a statement to this House on 31 July 2007, the Minister of State for Defence, my right hon. Friend the Member for Coventry, North-East (Mr. Ainsworth), said that after 1 August the vast majority of military support in Northern Ireland will be broadly comparable to the assistance that is currently provided in Great Britain, but tailored for the particular circumstances in Northern Ireland. He also made it clear that the provision of explosive ordnance disposal would continue; this was, of course, used to deal with the car bomb in Castlewellan in January of this year.
	I hope that, whatever concerns may have been expressed by hon. Members last week—and it may be appropriate to comment on the serious distortions and misleading reports in some of the media at that time—hon. Members will now feel reassured about the role of any technical support being used to tackle the current threat. This is, as the Chief Constable has repeatedly said, not about the return of troops to the streets, but it is about protecting the public at a proportionate level, and about protecting those who provide that protection, such as police officers and those who work to protect the international community or on international theatre operations.
	It has been 12 years since the last death of a soldier in Northern Ireland, and this has been a very dark few days for Northern Ireland, but it is a temporary darkness at the end of a tunnel of considerable light. The peace process and political progress, as part of shared power, have transformed Northern Ireland. The perpetrators of this attack believe they can stall the progress and, in stalling the progress, instil seeds of self-destruction in the politics of today. Indeed, they have clearly chosen to act in this evil way only because the politics of a shared future is working.
	The determination and resolve of all political leaders in the face of this brutal act are working proof of a unity of purpose. We are all united in our resolve that these criminals will not succeed. Our confidence must be stronger, our resolve even greater; and while the House will understandably be sombre as a result of this murderous attack, the greatest memorial to Patrick Azimkar and Mark Quinsey and their families will be in our determination to unite behind the peace process and the political progress in Northern Ireland.
	So let us make sure that those responsible for this attack are not given any opportunity to stall or prevent the progress of the people of Northern Ireland. Let us join together, and let this House send this afternoon an unequivocal message: the men of violence will not succeed; these criminals will not succeed—not now, not ever.

Shaun Woodward: I thank the right hon. Gentleman for his support, and I wish to commend to the House the very strong leadership that he and the Deputy First Minister showed yesterday to the people of Northern Ireland. I also want to mention his support for the hon. Member for South Antrim (Dr. McCrea), whom the Prime Minister met this morning to discuss the barbaric events of Saturday evening. I absolutely agree with the right hon. Gentleman that there should be no cover provided by putting the event under the heading of a terrorist attack. It was a criminal attack of the most callous, brutal and evil kind, and I absolutely join him in recognising the contrast between the evil of Saturday night and the good shown by the public yesterday. One small example is that of a local Catholic church: the priest led the entire congregation out on to the street, near where the evil act was committed, and everybody in that Catholic church prayed for the souls of those who had died. There could be no greater distinction between what is good in people on the one hand and the evil of Saturday night, and what is terrible, on the other.

David Anderson: The clear message today is that the people of Northern Ireland will be the ones who will send the clearest message that they will never, ever let these people take them back to where they want to go. Will the Secretary of State join me in welcoming the decision by the Northern Ireland committee of the Irish trade union movement to call a series of peace rallies with other non-Government organisations for Wednesday lunch time, and wish them well in asking as many people as possible to support those rallies?

David Curry: Until last year, 38 Engineers was based in Ripon in my constituency and had been for many years. Does the Secretary of State appreciate the deep pride of the citizens of the second oldest city of England in the bravery of its soldiers, demonstrated notably in Afghanistan and Iraq? If any soldiers can be described as peacemakers, the Engineers must certainly qualify for the description. Would not the greatest tribute to the two soldiers, who expected to face death in Afghanistan but in fact found it on the streets of the United Kingdom, be for everybody to seek to bring to justice the people who have carried out this murder and to demonstrate, above all, that what those people did will not make the blindest bit of difference to the peace process in Northern Ireland?

Philip Hammond: I thank the right hon. Gentleman for his statement and for his courtesy in allowing me to see a copy of it in advance.
	The right hon. Gentleman explained to the House that the Chancellor is travelling to Brussels for a meeting tomorrow, but I think that the House will none the less be disappointed that we have apparently reached the point where the assumption by the taxpayer of an additional £250 billion-worth of contingent liabilities is not considered a sufficient reason to reschedule one's travel arrangements. There will also be disappointment that a Treasury Minister is before the House for the first time since the momentous decision last Thursday to begin quantitative easing, and has not taken the opportunity to update the House on that decision and its far-reaching implications for Britain.
	This massive second round of banking bail-outs is proof that the Prime Minister's first bail-out last October failed. The test of it will be whether credit actually begins to flow through our economy again, not what promises of more lending the Government say they have secured. The £14 billion of lending commitments that the Government claim to have extracted from Lloyds Banking Group is less than half of the total taxpayer investment in Lloyds, and less than 5 per cent. of the total taxpayer exposure to Lloyds HBOS. Will the Financial Secretary confirm that the additional promised lending will be subject to the group's prevailing commercial terms and conditions, including on pricing and risk assessment, and, in relation to mortgage lending, that it will be subject to the group's standard credit and other acceptance criteria? If that is the case, is not this pledge just more simple rhetoric?
	It is now clear that the merger of Lloyds and HBOS was a bad deal, put together without full and proper understanding of the state of the HBOS book, certainly on the part of Lloyds and possibly on the part of the Government. Until last October, Lloyds had stood aloof from the chaos engulfing the banking sector, as a sound, somewhat old-fashioned bank with a reputation for caution that attracted small investors and drove to distraction those in the City who preferred riskier plays. In the space of a few weeks, that sound, solid bank, which would have been quite capable of prospering without the support of the taxpayer, has been transformed into a banking behemoth that is incapable of surviving without these huge infusions of taxpayer funding. I ask the Financial Secretary whether the Government really believe that the creation of this crippled giant at the heart of our banking system is the best outcome if the objective is to maximise the flow of credit from the banks to Britain's recession-hit businesses and households.
	Back in October we were told that the merger was a commercial deal put together by the managements of the two banks, and that all that the Government were doing was removing the competition barriers that would have prevented it from going ahead. However, there were persistent stories at the time, promoted by those close to the Prime Minister, that in fact the Prime Minister had brokered the deal and driven it through to completion.
	Now that the taxpayers' total exposure to Lloyds HBOS is approaching £300 billion, will the Financial Secretary explain why neither the Government nor the Prime Minister realised at the time that, far from rescuing HBOS, the merger would drag Lloyds down the path of taxpayer bail-out and part nationalisation? Is the Financial Secretary sure that, of all the options available to them, the route that the Government have chosen—insuring assets within the banks—is the best way in which to get credit flowing at the minimum, long-term cost to the taxpayer? Can he look the House in the eye and tell it that the guarantee option has been chosen on the basis of the economics and long-term best value for money for the taxpayer, not simply because, alone among the alternatives, it keeps the cost to the taxpayer off the balance sheet and out of sight until the losses crystallise?
	The Prime Minister's mantra is that the crisis was made in America and blew in on the wind to afflict a blameless Britain. He paints a picture of toxic assets, which comprise US sub-prime mortgages, complex derivatives and impenetrable credit default obligations. However, will the Financial Secretary confirm that more than a quarter of the toxic assets that the Government guarantee in the deal are plain, old-fashioned UK mortgages, lent by HBOS in a bout of over-exuberance, which testifies to the failure of the Prime Minister's tripartite regulatory system? In effect, is the taxpayer not taking a £75 billion bet on future house prices not falling by more than 10 per cent. from 31 December 2008? If the Financial Secretary has not noticed, they have already fallen by 3.3 per cent. in the first two months of the year. I do not know of a single commentator who does not believe that they have further to go.
	Let me consider fees. The Financial Secretary set out in his statement, and Lloyds set out in its statement to the stock exchange, the fees payable by Lloyds Banking Group to the Treasury. However, the end of the Lloyds announcement refers to "certain interim arrangements", agreed between the Treasury and Lloyds and relating to the management of the assets in question. I imagine that the right hon. Gentleman knows that, in the deal between the Dutch Government and ING, as well as the fee payable by the bank to the Government for the guarantee, a fee is also payable by the Government to the bank for managing and financing the assets that the guarantee covers to maturity. Will he give hon. Members a categorical assurance today that no fees whatsoever are payable under the deal by the Treasury to Lloyds Banking Group? Will he confirm that the ban on cash bonuses that he announced for this year will extend to future years? Will he adopt, at least for Lloyds Banking Group, our policy of a £2,000 permanent limit on cash bonuses? Will he also tell the House what steps the Government have agreed, as part of the deal, about executive and director pensions in Lloyds Banking Group?
	For the size of the British economy, we have committed more than any other country to bailing out our banks—approximately £1.2 trillion—and we have precious little to show for it so far. The first banking bail-outs failed to get lending flowing again, requiring taxpayers to stump up hundreds of billions of pounds in further guarantees and capitalisations. The temporary VAT cut has failed to stimulate consumer spending and the stamp duty holiday has failed to stop house prices nosediving. The Government have made a plethora of announcements of support for business and home owners, many of which have been shown up as hollow rhetoric, with most schemes not yet operational and none delivering measurable assistance to the front line.
	Hard-pressed businesses, families and home owners throughout the country have had enough of the rhetoric, the endless announcements and the activity for activity's sake. They want normal credit conditions to be restored—that will be the test of today's announcement and the very least that taxpayers should expect in exchange for the £1,200 billion that the Government have pledged on their behalf to the banking system.

Stephen Timms: I can agree with the hon. Gentleman's final comment, but there is not much else with which I can agree. To fix the economy we have to fix the banks first. As with previous measures, capital support for banks is an investment and it will eventually be sold for the benefit of taxpayers. With the insurance scheme, the eventual cost to the taxpayer over the lifetime of the scheme will depend on economic conditions and how assets are managed.
	However, the key is ending the uncertainty that has been holding Lloyds back from lending and enabling it to make a significant additional commitment on lending, which is certainly not rhetoric, as the hon. Gentleman suggested, but an additional £14 billion on top of what was planned for this year, with a similar sum envisaged for next year. I can confirm that that lending will be subject to the bank's normal commercial considerations, but that lending will be made. It will be reported regularly to the Government and we shall report regularly to the House, as I said in my statement.
	The hon. Gentleman made some comments about the merger between Lloyds TSB and HBOS. The priorities that we were concerned about were stability in the financial sector and, in particular, avoiding a catastrophic failure on the part of HBOS. Lloyds and HBOS had been talking for some time and they asked the Government whether it was possible to modify the competition rules to allow the merger to go ahead. Like others, we concluded that that was the right thing to do. The hon. Gentleman suggested that it was not the right thing to do, but he might wish to have a word about that with the shadow Chancellor, who said on "Newsnight" on 17 September: "I spoke to both of the chief executives today of the two institutions and made it clear the Conservatives support what they're trying to put together". The shadow Chancellor's view is therefore somewhat different from the one that the shadow Chief Secretary has put to the House this afternoon.
	The boards of both banks recommended acceptance of the agreement to their shareholders and both sets of shareholders agreed. Lloyds shareholders voted on 19 November, with more than 95 per cent. of them in favour of the merger, and HBOS shareholders voted on 12 December. There was therefore broad agreement on what was done.
	Of the assets that are covered by the announcement today, rather more than 80 per cent. come from HBOS, which was largely active in the UK, but also, to an extent, in Ireland and, to a smaller extent still, in some other territories. I can confirm to the hon. Gentleman that there are no fees payable to the Treasury as part of the package announced today. The costs of setting up the scheme will be charged to the participating institutions.
	Finally, the hon. Gentleman is quite wrong about the VAT cut. because there is growing evidence of its effectiveness in stimulating the economy. Let me draw his attention to information published by Goldman Sachs just over a week or two ago. As others have pointed out, the effectiveness of the VAT reduction as a stimulus to the economy will grow over the course of this year, leading up to the rise back up to a rate of 17.5 per cent. on 31 December.

Vincent Cable: There would once have been a time when a Government commitment of £260 billion of taxpayers' money, which is just under a quarter of gross domestic product, would have merited the attention of the Prime Minister, let alone the Chancellor. It is no disrespect to the Minister, who is generally regarded as very decent and very capable, to say that on this occasion not only are we denied the attentions of the organ grinder, but we are not sent the monkey either, but the monkey's second assistant.
	I agreed with most of the questions that the hon. Member for Runnymede and Weybridge (Mr. Hammond) asked; most of his points were well made and valid. Like the Minister, however, I am a bit puzzled. The hon. Member for Runnymede and Weybridge—and, indeed, all of us—had five weeks in which to do due diligence on this merger, and to think about its implications. When the matter was put to a vote in the House, he and his colleagues voted with the Government in favour of it, leaving us to vote against it.
	Let me get to the core of the statement and the Lloyds HBOS proposal. Will the Minister confirm that this is now a nationalised bank that is publicly owned and controlled? Will he also repudiate the comments of the chief executive, Mr. Daniels, who described the taxpayer—the majority owner of the bank—as
	"just another name on the share register"?
	How can the Government have retained as chief executive someone who treats the taxpayer with such total contempt?
	When will the Government at last put their own Government directors on to the board to ensure that the bank acts in the national interest, particularly in relation to lending? The Conservative spokesman quite rightly referred to the ambiguities of the bank's lending policy, but is it not the case that Lloyds entered into a lending agreement last October, which has not been observed? Why should we have any more confidence in this one, unless the bank is properly directed?
	I want to ask the Minister about tax avoidance. Quite apart from HBOS, Lloyds is known to have undertaken large-scale tax avoidance. Will this stop, now that the bank is fully publicly owned? Mr. Daniels has been described as enjoying a £25,000 tax planning allowance from his bank, to help him to avoid paying UK taxes. Will this continue under public ownership?
	As far as payments are concerned, we have had the scandal of Sir Fred Goodwin. Are we going to have a similar problem with Sir James Crosby and with Mr. Cummings, whose property dealings brought down HBOS and who I believe is entitled to a £6 million bonus? Are those arrangements going to be preserved? So that we can have clarity about who is being paid what, may we have an assurance that, if very highly paid executives in this bank and elsewhere are paid large amounts—let us say, more than the Prime Minister—those emoluments will be made fully transparent? I believe that Lloyds is today refusing to divulge the payments that are made to its senior executives. Why cannot those figures be put fully into the open?
	On bonuses, I would go even further than the Conservative spokesman. I do not see any justification for paying bonuses. This is a bank that has made large losses. Why should the taxpayer pay those bonuses? It is all very well to appeal for sympathy for the relatively low-paid staff, but how would people react if it was announced that every public sector worker was to be paid a £1,000 bonus, in the present state of the public finances? There is no justification for such payments, certainly at the top end, or altogether.
	My final question relates to the document, "Evidence to the Office of Fair Trading on the proposed Lloyds TSB and HBOS merger". The private shareholders are rightly outraged about the way in which they have been treated, and they are rightly calling for the head of Sir Victor Blank. They want to know why the documentation lying behind this Treasury paper is not being made publicly available. It states that, in September, the Government considered a range of alternatives. Will they publish those alternatives, and the reasons why they rejected them? As the paper is so heavily redacted, will they also publish the full version, so that we can be sure that nothing is being hidden from the public and the House?

Dennis Skinner: Is it not worth while to make the point that we should use the right language in relation to saving the banks? In reality, this step, and subsequent steps, had to be taken because more than 70 per cent. of voters have bank accounts. We had to save one bank in particular, and then others, because if one had been allowed to fail, there would have been a domino effect, with them all failing. That is why all parties agreed on the rescue at the beginning—they knew that their voters would not want to see a bank finish up in the gutter. We should use that language, and not give the impression that somehow we are saving bankers, bonuses and all the rest. While I am on the subject, in the absence of full-scale nationalisation, when thinking about future legislation, has my right hon. Friend looked at the idea that I put forward the other week—to pay Fred Goodwin and all the top executives' bonuses out of the toxic debt, so that they would then get nowt.

Andrew MacKinlay: I would like to put it to the Financial Secretary that some of us feel that we are involved in the banking and financial equivalent of mission creep. His statement relates to the Lloyds settlement, but since the Chancellor last made a statement on the RBS, a contingent liability report has been placed on the Table of the House. Why will the Government not publish all the details of the announcement today and of the RBS ongoing negotiations, which have not been concluded, instead of producing only two copies—one, technically, on the Table, and one in the Library—of such key and critical decisions. I confess that, like many other Members, I find it difficult to comprehend the scale, let alone the details, of what I am signing up to and, through my silence, acquiescing to. We need full disclosure. We need Command Papers that are numbered and printed, rather than just those two copies that have been supplied to the House.
	This is a failure, and it is time for it to be addressed. We need proper, full disclosure to the House, proper debate, and a vote subject to the affirmative procedure if necessary.

Andrew MacKay: May I return the Financial Secretary to his answer to my hon. Friend the Member for Putney (Justine Greening)? Surely he is not really saying—notwithstanding the independence of the Bank of England—that the House should not discuss, debate and question quantitative easing when it has led to the biggest printing of money in our lifetimes. Will he give an assurance that that will happen?

Stephen Timms: The initiative for the merger came from the banks themselves; I understand they were talking about it some time before they approached the Government. The board then recommended merger to the shareholders, and the shareholders voted in favour of it. The hon. Gentleman may well have wanted to ask some questions of board members, as this was clearly an initiative that came from the banks.

Anne Main: May I join the hon. Member for Thurrock (Andrew Mackinlay) in saying that I am feeling somewhat bemused by the enormously large figures to which we are not giving a lot of scrutiny? On Thursday, I asked for a statement on quantitative easing. May I ask where the figure of £75 billion was plucked from, and what scrutiny has been given to the effects of this on pension pots and annuities?

Hugo Swire: We have just heard from the Financial Secretary to the Treasury that the new deal with Lloyds will release an extra £3 billion for home loans. Does not my hon. Friend share my concern that that extra lending will be without any direction from the UK taxpayer, who is the majority shareholder, on what income or assets that lending should be based?

Peter Luff: I hope that we will again move towards a world where more prudent guidance about lending is offered to individuals who are making the most important purchase of their lives. One of the great failures of the past few years has been the failure to provide that guidance, so I am very sympathetic to what my hon. Friend says.
	The trouble is that the indebtedness in our economy— the indebtedness of individuals, companies and the Government—poses huge challenges to business. There is an overwhelming need to refinance corporate debt this year, a lot of it held by foreign banks that are now desperately short of liquidity and unprepared to offer that refinancing. Intriguingly, one senior banker said to me that in the great scheme of things, given the scale of the tidal wave of corporate debt requiring refinancing this year, the schemes that we are debating in our consideration of the estimates today, such as the enterprise finance guarantee scheme, amounted to little more than "a rounding error". That is a salutary thought. When I think of the hundreds of billions of pounds that we have been talking about, I see what he means.
	It would have been nice to have had a statement in the House on the implications of quantitative easing; that would have been good, and I am surprised and disappointed that we have not had such a statement. Quantitative easing may make the refinancing of corporate debt more achievable, but its scale does not match up to the level of corporate debt that needs refinancing. Anyhow, the smaller businesses that are rightly of concern to the Government and the House will not be selling bonds to the old lady of Threadneedle street for a while yet; that is for sure. What businesses, and small businesses in particular, need is working capital; it is often overdrafts that they need, not loans—a point that my hon. Friend the Member for Northampton, South (Mr. Binley) made in a very fine speech on Friday in the debate on my private Member's Bill on small business rate relief. I am sorry that the Government could not bring themselves to back my Bill. Small schemes of that kind add up and form a big picture; they would make a world of difference to small and medium-sized businesses. I will not repeat all that my hon. Friend and I said about the importance of small businesses to the economy. Members of the House who are interested can read the debate in Friday's  Hansard. The fact remains that small businesses are still finding it desperately difficult to access the finance that they need.
	The Business and Enterprise Committee had a session with the banks before Christmas. Their evidence appears in the tagged bundle of papers provided for today's debate. Intriguingly, we heard clear evidence from them that the political pressure that they were under had led them to make improvements, as regards base rates and overdraft rates, particularly for small businesses. It is important that the House keeps up the pressure, and reminds banks of the need to address the issue. However, the CBI's chief economic adviser has said:
	"Significant government measures aimed at restoring credit flows are gradually being put into place, but the pace of delivery is slow. As can be seen in this survey"—
	that is, the CBI's February survey—
	"businesses' access to credit is just as difficult as it was a month ago.
	The cost of borrowing, the credit freeze and the lack of a solution on trade credit insurance"—
	I shall come to that issue in a minute—
	"are having a growing impact on business activity."
	The CBI's director general, Richard Lambert, has called for the Government to use a clearer, louder voice to explain the recovery plans, as there is confusion in business about what those plans cover and how they fit together. That follows what the CBI said in January about the need for a clearer timetable. The Federation of Small Businesses told me that it really appreciates what the Government are trying to do, but it adds that
	"feedback from our members suggests that generally, small businesses are not satisfied with the speed with which measures to help small businesses are being passed on."
	The Engineering Employers Federation told me:
	"The government has announced a number of support measures for business, with BERR in particular leading on measures to free up the flow of credit. There has been some criticism of the piecemeal nature of these initiatives and the lack of an overall discernible strategy."
	The enterprise finance guarantee scheme is aimed at viable businesses that have a history of borrowing from banks, but the EEF gave an example of a shortcoming in the detail of the scheme. It says:
	"The Enterprise Finance Guarantee (EFG) Scheme, announced in January, has been slow to get off the ground. In January, EEF's steel division, UK Steel, also pointed to the incorrect exclusion of steel from the scheme and this has only recently been reversed."
	I have had to write to Lord Mandelson to seek clarification on whether the scheme fully applies in Northern Ireland; that is apparently still not clear. On 16 February, the  Financial Times reported that only £12 million had been lent under the scheme a month after it was launched.
	The FSB has carried out a survey, which is available today. It says that a third of all small businesses are expecting to close down, or to lay off staff, if they do not have more help, but fewer than half of them had even heard of the enterprise finance guarantee scheme. In another FSB survey, no respondents said that branch bank managers were promoting the Government funds at all. The FSB says:
	"Generally, it is apparent from responses that while some businesses have benefited from Government measures, for the most part, high street banks are either not aware of the detail or Government schemes, do not know how they would operate, and/or are concerned about the risk they would carry (25 per cent.)."
	I saw a long story about that issue in  The Sunday Times yesterday, and there are serious concerns about the level of personal security still being sought from companies under the enterprise finance guarantee scheme. There are big questions there.
	If I had more time—if it were not for the statements—I would cite some case histories that prove that these are not anonymous concerns. They have specific roots in reality. I can show business after business that is not getting the help that it thought it would get as a result of issues with the way in which the schemes work, but I will not do that, to save time. I shall also not expand at length on the delay to the much bigger working capital scheme—a £10 billion scheme, which was revealed in the  Financial Times last week as being "weeks behind schedule". It is another example of a scheme winning headlines, but still lacking tangible reality.
	What about the promise of 10-day payment from the public sector? All members of the Federation of Small Businesses who responded to the survey cited waiting more than 30 days to be paid by central Government Departments, local authorities and primary care trusts, so the 10-day deal is not working.
	The Government have said that they are looking at trade credit insurance. The importance of that cannot be overstated. All business organisations are concerned about the withdrawal of trade credit insurance. It is affecting a growing number of businesses, particularly in the construction, retail and electronic sectors. I know that manufacturing businesses in my constituency are suffering from the lack of trade credit insurance. We need to know soon—very soon indeed—whether the Government intend to act on trade credit insurance or not.
	Let me give one example. Focus DIY, one of the largest DIY retailers in the UK, owns 183 stores and employs almost 5,000 people. I am told, and I have no reason to disbelieve it, that it is in healthy economic shape and has just opened two new stores. It has had all its trade credit insurance withdrawn. The consequences do not need to be spelled out. That is happening across the retail sector, leaving otherwise completely healthy businesses facing an inevitable funding crisis. If those retailers collapse, jobs will be lost not only in those businesses, but in the manufacturing industries that supply those retailers. Sorting out trade credit insurance must be a very high priority for BERR. I look for reassurance from the Minister when he replies to the debate that that is indeed the case.
	Another issue that we have not heard much about, but that ought to go on to the Minister's agenda is leasing. Despite Government's initiatives and support for UK banks, there continues to be a sharp decline in the liquidity needed to enable small and medium-sized enterprises to lease essential business assets, such as telecoms and data services equipment. Demand from the SMEs continues at last year's levels, but the almost complete withdrawal of UK banks from funding smaller businesses on normal terms, if at all, means that specialist leasing companies have to rely on foreign banks and to take more risk on their own books, and they cannot afford to do that for much longer. That reduces the number of SMEs able to access affordable leasing arrangements. There will be serious consequences for SMEs if we cannot give them the quality systems and technology that they need to develop their businesses. Leasing, sometimes of quite small items of kit, is hugely important in the SME sector, but the money is not available to finance it. I hope the Minister will be prepared to look into that with representatives of the leasing sector.

Peter Luff: The right hon. Gentleman tempts me to recite the Committee's 14th report, which I recommend to him. There is a particularly good footnote about Lord Wellington appearing before the Bar of the House of Commons. I think that there was only one occasion of substance in recent history when there was a Minister in the Lords without a Cabinet Minister to match him here in the Commons—Lord Cockfield, from 1982 to 1983. As far as I recall, Baroness Chalker was not in the Cabinet at the time and was only a Minister of State; her post did not involve a separate Government Department. That was a mistake then, and it is a mistake now.
	In our 14th report, we said that
	"it would be possible to follow earlier precedents and ensure that a Cabinet Minister in the Commons is able to answer on behalf of the Department".
	We discussed accountability with Lord Mandelson and he suggested
	"you alter the Standing Orders of the House of Commons to allow Lords heads of department to come and answer questions in the Commons",
	although he admitted he was
	"way beyond my comfort zone".
	We thought that that was an idea worth exploring and we looked at some ways of doing it. In view of the time, I will not labour the point, but we said that detailed discussion about a mechanism was probably best left to the Procedure Committee. We were
	"convinced such a mechanism is needed, particularly at a time of such economic turmoil",
	but we were comprehensively rebuffed by the Government in their response, Command Paper 7559:
	"The Government is content that the current arrangements provide for rigorous scrutiny in both Houses of the work of the Department. The Secretary of State has indicated that he is keen for the Business and Enterprise Committee to act as the principal conduit of his accountability to the Commons and he is happy to discuss further with the Committee how that role might be developed."
	The Government observed that
	"the Secretary of State has already appeared twice in front of the Committee".
	Yes, he has, and we welcome his preparedness to come before us. It is always entertaining, and often illuminating when he does, and we are grateful for that, but we have not got the time to spend our entire lives asking House of Lords Ministers to come before us to be accountable to Parliament, when they should do so in this House. We cannot do that, and to do so is not an adequate replacement for making them accountable here.
	The Government said:
	"Ministers have a duty to Parliament to account, and to be held to account, for the policies, decisions and actions of their departments and agencies. They do this in a number of ways. In the House in which they sit, Ministers answer questions, make statements and participate in debates."
	I apologise to the Ministers on the Front Bench, but the four most important Ministers in the Department do not sit here. They sit in the other place, and that is the problem. I am sorry if that hurts, but they are the four most important Ministers taking the most important decisions and we cannot question them.
	One of the most extraordinary claims in the Government's response was this:
	"A Minister who is a Member of the House of Lords may make a statement to a grand committee of the House of Commons and answer questions on it."
	There are only three Grand Committees—for Scotland, Wales and Northern Ireland—and I am advised by the Journal Office that so far during this Parliament, only the Welsh Grand Committee has met, and it has only met twice. The Scottish Grand Committee has not met since 2003. This idea of Grand Committees as a mechanism, even if we got the English regional Grand Committees, is not a good one because we want the whole House to be involved in this process. Allowing regional Grand Committees to call Ministers is not a substitute for the democracy of this House.
	Another point raised by the Government, which we were just discussing, was this:
	"There have always been Cabinet Ministers in the House of Lords...The Government does not believe that the current situation is any different in principle from any of these other recent examples."
	I just do not accept that; it is factually wrong. This situation is different by an order of magnitude. For a start, this is a time of economic crisis, and the decisions being taken by these Ministers are hugely important. When I was a special adviser at the old Department of Trade and Industry and Lord Young of Graffham was Secretary of State, my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) was a Cabinet Minister, sitting here and answering questions. We should have something similar now. Actually, it would be good to have my right hon. and learned Friend in the Department again, and sitting round the Cabinet table, not just the shadow Cabinet table. But that is a partisan point, and Select Committee Chairmen must not make those. It would be good to have a Cabinet-ranking Minister in this House at this important time.
	The Government finally said:
	"There is also a risk that the burden on Ministers of having additional duties in the other House might compromise their ability to participate fully in the work of the House in which they sit."
	Almost all Ministers in the Department do not have other responsibilities in other Departments—only two out of a team of seven do not fall into this category. That is all right, then: those Ministers can have conflicting responsibilities, but they cannot make themselves accountable to this House. That is a great shame.
	I have spoken for far longer than I meant to. It is an unusual opportunity, and this is a series of important questions that the Department needs to answer. It is doing better, but it needs to up its game. It must deliver on what it promises, and promise the right things, and it must improve its accountability to this House. I do not regard the Government's response to our 14th report as anything other than a severe disappointment.

Tony Baldry: I do not think that any of us on any day can underestimate how deep the present recession is becoming and just how many jobs are being lost. In a patch like mine, which most hon. Members would consider to be a relatively prosperous part of the country, there is barely a day—certainly not a week—goes by without very significant announcements being made of further job losses in the automotive industry, retailing, automotive components and pretty well every sector of the economy.
	What is also frightening is just how quickly businesses are running out of cash and the number of job losses that is leading to. Last week, for example, a very professional printing business in my patch announced that it would have to make about 60 people redundant—simply because of a somewhat disappointing order book for January and February. In the past, if a business had a cash-flow difficulty of that kind, it would have either gone to the bank to sort out future financial loan arrangements or gone to the shareholders to raise extra funding: neither of those options is now available, so businesses that are running out of cash find that the only way they can respond to it is by making people redundant and laying them off.
	Even in the most recent unemployment figures—for January—we are already seeing the highest unemployment figure in Oxfordshire since May 1997, when the present Government came to power. In the month of January, unemployment in Oxfordshire jumped up by 1,104 people since the previous month—the biggest increase in a single month since March 1991. I suspect that, as the months go by, we are going to continue to see unemployment figures tragically beating those of previous months. Twice as many people are out of work in Oxfordshire now as compared to a year ago, and it is getting worse.
	What we need, then, is for the Department for Business, Enterprise and Regulatory Reform to be a champion in Whitehall and it should devote all its attention to being an advocate for businesses in these particularly difficult times. Against that background, it is disappointing that so many of the relevant Ministers are in the other place. They are also somewhat distracted by trying to sort out the problems of the Royal Mail and, indeed, sort out the internal workings of the Labour party in terms of Royal Mail.
	Lord Mandelson obviously appreciates that the Department should help business and be an advocate for it because on 9 February, he wrote us all a letter to tell us what the Department intended to do. We should compare the promises in the letter with what is actually happening in reality, because, as the hon. Member for Winchester (Mr. Oaten) rightly and correctly said, all too often the statements and promises made by the Government in the House do not compare with the reality on the ground.
	Let me mention one good thing that the Department has done. A number of us who participated in a Westminster Hall debate recently were very concerned that, with so few Ministers based in the House of Commons and given the issues faced by our constituency firms are so immediate, by the time we wrote to Ministers and the information went all around Whitehall, it would take far too long to get responses. We suggested to the Minister responding to the debate that it would good if there were a hotline that MPs could use to raise urgent and immediate issues with officials in BERR. The suggestion I put forward had all-party support on the day and I am pleased to credit Ministers for introducing it. For the first time, the Department now has a helpline and MPs are able to communicate directly with officials on policy issues. Lord Mandelson made it clear in his recent letter that if we had any urgent matters relating to a local company in difficulty, we could get in touch with David Smith, the director of special projects at BERR by e-mail on economy@berr.gsi.gov.uk. Having used it on several occasions since it was announced, I have to say that officials have not only been courteous, but have interacted, responded and taken up issues with other Government Departments. That is what we need them to do.
	Let us look, however, at what else the Department says it is doing. On finance and the various schemes for business support, I really question the real value to business of the enterprise finance guarantee scheme. First, the banks have 75 per cent. of their lending guaranteed by the Government; secondly, individuals or companies have a 2 per cent. premium charged on the outstanding balance—presumably that is some sort of insurance scheme on the remaining amount. It has now become clear, however, that the banks expect personal guarantees for 100 per cent. of the loan and that those 100 per cent. loan guarantees are offered with the support and agreement of the Government. As Phil Orford, chief executive of the Forum of Private Business, has said:
	"It is outrageous. The guarantee scheme is supposed to be lending of the last resort when small firms have explored every other route".
	If personal guarantees of 100 per cent. are sought, what is the advantage of this scheme over any other banking scheme? A director of a public company, a small plus-listed or alternative investment market-listed company is not in a position to give personal guarantees, so those smaller public companies are effectively being excluded from the scheme.
	What happened with the enterprise finance guarantee scheme? First, for a number of weeks, it was clear that the banks did not understand what was going on. Then, they did understand—and only too well, because the Treasury told them—that they only needed to lend money if they could get 100 per cent. personal guarantees. It will not be surprising if the take-up is not huge. One business man put it very well:
	"To my mind, the guarantee scheme is one of those things that makes the government sound good without it actually having to come up with anything."
	All too many of these schemes seem to be about wanting to make the Government look good, without actually delivering anything.
	Another scheme that Lord Mandelson mentioned in his letter of 9 February was the working capital scheme. One would assume from the letter that the scheme was up and running and that people would know how to access the funding, but all of us who take an interest in these matters know that the detail of the working capital scheme has yet to be sorted out—a point made by my hon. Friend the Member for Mid-Worcestershire (Peter Luff), who chairs the Select Committee.
	There is no point in banks such as the Santander, Abbey National or others saying very virtuously that they are putting an extra £100 million into the enterprise finance guarantee scheme, when it seems to me that those bankers are taking on no risks at all. In the announcement earlier today, we heard about supposedly large sums of money coming from Lloyds for extra lending, but what is the point of it all if the money is released only if secured by the personal guarantees of small business men? I do not see how the scheme will work or how it will help any companies with their present cash flow. It is not surprising that in a recent survey of the Federation of Small Businesses, more than half of those questioned said that they did not think that the scheme would encourage bank lending.

Mr. Deputy Speaker: Order. I have no view on the matter, I think the hon. Gentleman means the hon. Member for Banbury.

Tony Baldry: The scheme is putting unsustainable pressure on many businesses, but my real point is that if a business wants to raise money on a secured loan it can do so with a bank anyway, so why are the Government trumpeting their introduction of a scheme that does very little?
	Lord Mandelson's letter also trumpets the following:
	"HMRC is also working with businesses on tax or VAT deferrals."
	Actually, when we get down to the detail, Her Majesty's Revenue and Customs says that will be only for new inquiries. A company in my constituency, which I will not name for reasons of commercial confidentiality, wrote to HMRC on 11 November 2008 asking permission for deferment of pay-as-you-earn and national insurance contributions. It was not until 6 January, nearly two months later, that HMRC wrote to the chief executive of the company:
	"I am writing to advise you that I have assumed responsibility for collecting any tax debt owed by the company. I can also confirm that I have received your correspondence dated 11th November".
	It is wholly unacceptable for HMRC to take from 11 November 2008 until 6 January 2009 to reply to a sizeable company that is clearly in difficulties and asking for help with deferment of tax and PAYE. My impression is that what happened in that case happens in most instances and HMRC is merely telling companies that approach them, "Well, if you get your tax affairs up to date we might consider what we could do in the future".
	There is another way for the Government to help small businesses in their dealings with HMRC, and BERR could help as an advocate. When customers fail to pay for goods or services, companies have to pay the VAT on the bad debt, but they cannot reclaim it for six months, which adds insult to injury. With today's technology one can scarcely believe that it would be impossible for the Treasury either to remove the need to pay VAT on bad debts—thereby easing cash flow—or at least to repay the VAT much more speedily than six months. For a number of businesses in my constituency finding that they have to pay VAT on bad debts just adds insult to injury.
	What is BERR doing as a champion in the Government to deal with the mismatch between the jobs we are losing and the jobs we need? I shall give just one example. For me, one of the most depressing things recently was talking to skilled young automotive engineers who were made redundant at Prodrive because Subaru no longer sponsors a Formula 1 racing team. I then happened to hear a presentation from Transport for London and Crossrail about the Crossrail project and the refurbishment of the London underground. The House may not know the average age of a London underground engineer—it is 58. Who in the machinery of government is trying to ensure that the skills of those young automotive engineers, who clearly recognise that they will not be working in automotive engineering for some time, are put to good use working in other parts of the economy where their skills are needed?
	We hear much trumpeting of the 2012 Olympics. There are still considerable skills shortages in construction in London, and I cannot believe that in other parts of the country where house builders and others have been laid off there is no potential to match up some of their skills with the skills needed for the 2012 Olympics, but who in the machinery of government is doing that? It should be a task where BERR acts as an advocate to try to ensure that there is not a skills mismatch.
	Many of us are organising job clubs in our constituencies to try to support people who are out of work so that they can get back to the world of work as speedily as possible. However, that needs people in the machinery of government to ensure that everything is pulled together. At present, one has no sense of that happening. One has no sense of the regional development agencies or anyone else trying to ensure that the skills we have are put to the best possible use.
	The other day, the Secretary of State for Energy and Climate Change made a long and passionate speech about what Britain can do in terms of green technology. Undoubtedly, the market is worth trillions of pounds and it could produce large numbers of new jobs, but one has no sense that anyone in the machinery of government is trying to see how areas such as mine in Oxfordshire—connected to the universities and to new technology—can promote green technologies and take the opportunities they offer.
	Indeed, one does not even have a sense that BERR is sorting out basic things such as broadband so that the country has the right technological infrastructure. We have the slowest broadband speeds in the developed world. The situation is atrocious. We need much greater energy and effort from BERR. The Department should be the champion and advocate of business in what are clearly some of the most difficult times ever for UK businesses. We need Ministers' 100 per cent. attention on that task

Brian Binley: I congratulate my hon. Friend the Member for Banbury (Tony Baldry) on wanting to explain the situation of business in the real world. That is one of my concerns and I hope to make the point to the Government equally forcefully.
	I pay tribute to my hon. Friend the Member for Mid-Worcestershire (Peter Luff), who as Chairman of the Business and Enterprise Committee has done a tremendous job. His speech—especially on accountability —was immensely valuable, as was the contribution of the hon. Member for Winchester (Mr. Oaten) who also made points in that respect.
	I want to talk not only about accountability but about assessment and the monitoring of performance, because there is a sizeable shortcoming in the Department in assessing how the actions of Government work in the real world. I shall concentrate most on that area. It is true that the CBI and the manufacturing associations have paid tribute to an improved DBERR performance, which is to be welcomed, but the jury is out as to the Department's performance for small and medium-sized businesses—the remarks of my hon. Friend the Member for Banbury particularly underlined that point.
	I want to add to my hon. Friend's comments by drawing to the attention of those on the Treasury Bench the reality faced by many small businesses. I make no apology for repeating some of the things I said in my contribution on Friday in support of the Bill promoted by my hon. Friend the Member for Mid-Worcestershire. I am sorry the Bill was not accepted by the Government at that time.
	The truth of the matter is that small business faces a harsh reality that is quite unique. It has never faced such a situation before. I worked in a small business in 1979-80 and created my own in 1989-90, and both those periods were pretty harsh. But believe me, this situation is unprecedented. Small businesses face problem upon problem, and I shall give just four examples.
	Cash flow is a real problem, especially when caused by a one-off debt default. For a small business, it is a massive problem when someone does not pay a bill of £5,000 or £10,000. That might not seem a lot in the great world of the City, or in the portals of the headquarters of the CBI but, in our market towns up and down the country, it is the blow that puts small businesses out of business, especially if the Government's promised schemes are not forthcoming, which they are not at the moment. The truth is that the money is not getting through.
	Debt repayment times are lengthening. For a small business—not in the cash business—that invoices every month and expects its money back in 35 days, the period is now extended to 60, 65 and 70 days. If businesses cannot get that working capital, that alone has the potential to put them out of business. Working capital is at a massive premium, and cash is king.
	So what are businesses doing? They are reviewing staff—I said this on Friday, and I repeat it so that the current Front-Bench team can take note—and cutting staff. Small businesses with 10, 15, 20 or up to 140 or 150 people are asking themselves how they can make savings, because their working capital—their cash flow—is under great pressure. They are tightening credit controls—if they were invoicing every month, they are now invoicing every two weeks, and some are doing so every week, in an attempt to ensure that the cash flows in.
	Finally, small businesses are cutting back on capital expenditure programmes, marketing and advertising budgets. All that tightening does not help the Government or the economy, because it means more unemployment, less spending and a deepening recession, and all for the sake of working capital and help with cash flow. The Government have been spreading new projects as though broadcasting or sowing in a field of corn, but most of those projects are not doing the job that the Government tell us that they are doing. The money is simply not getting through.
	I urge the Government, as I have on several occasions, to tell me about their assessment and monitoring of those schemes. I have not had an answer, which suggests to me that we are not monitoring and assessing how those schemes are working. That is a major problem, and I urge the Minister to take that on board and ensure that the Government understand what is happening in the real world. Although their fine words are welcome, the fact that what they say is not being put into effect certainly is not. It is causing businesses to go to the wall.
	BDO Stoy Hayward says that 33,900 small businesses will close this year. If that does not make the point that there is an urgent need, I do not know what does. Let me assure the Minister that for most small businesses there is only one game in town—survival. Their only objective is to be around this time next year. I urge the Minister to take that on board most seriously, because as BDO Stoy Hayward and businessmen in our constituencies tell us, businesses are going to the wall for want of working capital and help with cash flow.
	I am concerned about the sector, and about the lack of monitoring, accountability and assessment of how well the Department is doing. Let me give a couple of examples. In 2005, 11.6 per cent. of adults in Britain were considering going into business, and the Department made it an objective to turn that into 12.3 per cent. The Department's 2007-08 report made it clear that there had been no change, but the reasons for that are simply not in the report. The Department does not know why it did not hit its targets or achieve its desired figures.
	The audit report of August 2006 found that there were 3,000 national, regional and local government projects to support small and medium-sized businesses. The Government wanted to reduce that figure to 100. The report also criticised the Government for not assessing and evaluating the effectiveness of those projects. So what has happened? I have asked questions about the monitoring of the objective to cut the number of schemes from 3,000 to 100, and asked questions on three separate occasions. If Members can believe it, I phoned the Department today, and asked how many of the 3,000 had either been amalgamated or ceased to exist. I was told that the Department did not have a list of the 3,000. It defeats me totally how one can amalgamate, take over and carry out the work of 3,000 different projects if one does not know what they are. If one wants a cut to 100, it would seem essential to know the starting base. However, the Department simply does not know.
	The Government can use fine words to tell us about their schemes again and again, but unless they are prepared to monitor and assess the effectiveness of those schemes, and to fine-tune them when the assessment tells them that they are not as successful as they need to be, the Department is wasting its time, and so are the Government. There is no way that they will achieve their objectives unless they know the performance of the schemes. It is no good just talking about new projects unless they also talk about the delivery vehicles, and assess and monitor their performance. The truth, however, is that that assessment and monitoring are simply not happening. I checked Lord Mandelson's speech on the new schemes that he would put in place, and it contained not one word about how he would monitor or assess their performance.
	I do not have to tell you, Mr. Deputy Speaker, how vital the small and medium-sized business sector is to the well-being of our country. I do not need to tell you that most of the job creativity over the past six or seven years has come from that sector. I do not need to tell you that most of the original thinking—about 70 per cent., it is estimated—has come from that sector. I do not need to tell you that the supply chains are totally dependent on small and medium-sized businesses. For example, Airbus, in this country, employs 13,000 people directly, but it employs a further 140,000 in 400 small and medium-sized businesses throughout the country. That simple fact underlines the vital importance of the sector to UK plc.

John Bercow: I am extremely grateful to my hon. Friend for giving way, because he is presenting us with the benefit of his considerable commercial acumen and experience.
	Am I not right in recollecting that somewhat over 99 per cent. of businesses employ fewer than 100 people, that those businesses account for somewhat more than 50 per cent. of the private-sector work force, and that they generate two fifths or thereabouts of our national output?

Brian Binley: I thank my hon. Friend for making that point. On a number of occasions I have called for sunset clauses to be included in every new regulation that the House accepts. I have also called on the Government to stop gold-plating, and have pointed out that they have been found to have gold-plated 62 per cent. of a number of sets of regulations. It is not only Europe that causes regulatory problems and increases the regulatory burden faced by business; it is our own Government as well. But of course we can do something about it in both quarters, and I hope that we will.
	The Government have made promises about regulation, but again we have not seen the results. Indeed, we heard earlier in the debate that a supporter of the Government felt that some of the remarks made about cutting regulation were silly. I thought that a rather silly thing to say, because I know what businesses are feeling out there. They feel that they are being over-burdened, week in week out, year in year out, by additional regulation that is costing them a great deal of money.
	I call on the Government not only to consider the projects that they spread around, the new deals and the promises that they make to the wealth-producing sector, but to recognise that while it is easy for them to make promises, they increase frustration and cause immense concern in the business sector if they fail to keep those promises. When the Government say that something will be put into effect, businesses expect it to be in effect when the Government say that it will be. They said that their loan guarantee scheme would come into effect on 1 March, but it was not there on that date. People ask for papers and cannot obtain them: they do not exist.
	I ask the Government, and the Department, to be particularly aware of the need to monitor, to assess and to fine-tune in a way that will help business, and to report to the House regularly on that monitoring. So far, they have failed to do so.

John Penrose: I am struggling to work out how that intervention is directly relevant to the BERR estimates. Perhaps the hon. Gentleman would like to take up the point with me later.
	My hon. Friend the Member for Mid-Worcestershire presented the various options that might be pursued to improve the accountability of Lord Mandelson and other House of Lords Ministers to the House of Commons. He mentioned the excellent footnote in his Committee's report stating when such a thing last happened. I understand that the Duke of Wellington was invited to answer questions here in the House of Commons. When he walked into the Chamber, the entire House rose spontaneously in a demonstration of admiration and support for the great man's abilities. I just wonder whether the same would happen if Lord Mandelson turned up here. I know that Labour Members hold him in the highest regard, and that it is their great aim to make him loved by their party. Perhaps we could try it; then we would see how they genuinely feel.
	Before we go any further, let me say that I am sure the Minister is eager to point out that in Lady Thatcher's Government, the then Department of Trade and Industry was also led by a peer—Lord Young—for a time. The difference is that Lady Thatcher continued to ensure full House of Commons accountability by ensuring that the DTI was headed by not one but two Cabinet-level Ministers, one of whom—the right hon. and learned Member for Rushcliffe (Mr. Clarke)—is sitting next to me: one for the Commons and one for the Lords.
	The comparison between then and now is not flattering. I mean no disrespect to the individual BERR ministers in the House of Commons, who I am sure are all assiduous and hard working, but the plain fact is that their roles and authority have been reduced by this Government from one of the plum jobs in Westminster to the shrivelled and wrinkled parliamentary prune that we see today.
	The second issue is delivery, and it was the subject of much debate.

John Penrose: I completely agree with my hon. Friend. The Chair of the Select Committee, my hon. Friend the Member for Mid-Worcestershire, made the same point, saying he thought Whitehall would work better if there were a tension between the Departments and each set of Ministers were putting across their view—not trying to reconcile internally, but batting for their own team properly.
	The problem of delivery will be familiar to every businessman and woman throughout the country. They can have the best, most expensive, glossiest strategy or business plan in the whole world, but it is not worth a penny if they cannot put it into practice. The Government's record in this regard is spectacularly awful. Regulatory reform has been mentioned. In 2005, the Government promised to cut red tape by a quarter by 2010. We are now just a few months away from that deadline, but the British Chambers of Commerce "burdens barometer", which tracks these things, tells us that the costs of red tape and regulation have got worse, rather than better, every year since it began.
	It is not just red tape and regulation that have got worse. We are in a credit crunch, so the Government have rightly pledged to pay their suppliers promptly—within 10 or 14 days, depending on which announcement we believe—to help their cash flow. That is admirable, except that many NHS hospital trusts are, apparently, routinely failing to pay their suppliers within 30 days—far beyond Ministers' much-hyped promises.
	Even worse for Great Britain plc, what about all the different loan guarantee schemes, personally announced by Lord Mandelson, which are supposed to get the banks lending again, and which the Government have launched amid huge fanfare over the last few months? I am afraid it is clear that they have stalled. The working capital scheme was supposed to be the Government's flagship measure for getting credit moving in the economy. It was announced way back in January, but as of last week it had not guaranteed a single loan. The enterprise finance guarantee scheme was supposed to help small firms. It was announced in January but, as we have heard from the hon. Member for Winchester, the Federation of Small Businesses says that only 8 per cent. of its members can find a bank that is actually offering it. The loan guarantees scheme for car manufacturers was announced in January, but the Government have only just asked for applications from firms needing help, and they have not disbursed a single penny so far. The Government's guarantee scheme for asset-backed securities was announced in January, but will not start until April. The home owners mortgage support scheme was announced last December, but has not yet helped a single family that is falling behind with its mortgage. The recruitment subsidies scheme to get people into work was launched in January, but has so far not helped anyone to get a job, and the graduate internships scheme was announced in January, but has not even got a launch date yet.
	For the Government who are supposed to be the voice of business to be so weak on delivery and implementation is scandalous. As Alan Sugar has repeatedly rightly said on "The Apprentice", business men and women need to be practical. They need to be doers, not just talkers. They have to make things happen but, as this list of delay and failure shows, these Ministers and this Government are far better at press releases and glossy announcements than they are at the grubby, and often messy, business of delivery and implementation.
	I suppose we should expect that from a Department led by Lord Mandelson. The PR and spin are excellent, but the follow-through is rubbish. If the Secretary of State and his team were applying for jobs on "The Apprentice", I doubt that they would last 10 minutes. The electorate of this country have reached a decision, too. Their message to this Government is very simple: "You're fired."

Gareth Thomas: My hon. Friend makes the point for me; I am sure that the hon. Gentleman will ensure a better Conservative attendance in future.
	The hon. Member for Winchester (Mr. Oaten) made an interesting speech, in which he picked up some of the comments about accountability that the hon. Member for Mid-Worcestershire made. I recognise that the hon. Member for Mid-Worcestershire will not agree with me, but I hope that he will accept that I have addressed those points, and I shall try to come to some of his other points a little later.
	As the House will recognise, the shocks that the global economy has recently experienced are unprecedented in their scale and scope. This recession was not made in Britain, but its consequences are having a profound impact on the daily lives of many families and businesses. That is why the Government have developed a number of key policies aimed at providing real help now. A series of our measures are making a real difference for many businesses and families as we speak. I recognise that there is more that not only the Department but the Government need to do—all contributions from hon. Members from all parts of the House have alluded to that—and we will do it.
	Our measures include providing advice to businesses to help them weather the current economic storms and check that they are doing all they can to maximise income and minimise their costs. Almost 30,000 businesses have benefited from the business health check since it was made available. We have also provided new help to allow businesses in temporary financial difficulty to pay their tax bills on a timetable that they can afford. Some 72,000 companies have taken advantage of that new flexibility and reached agreement with Customs, and more than £1 billion in tax payments has been deferred as a result, providing businesses with real help with their cash flow.
	I should also point out that we first prevented British banks from going under, with all the horrendous consequence for the British economy and, in particular, the British business community that that would have caused. First, we prevented Northern Rock from going under—I remind the House that the Conservative party opposed that move and then, in a perfect example of the constantly shifting sands on which their economic policies are made, they changed their minds—and we have since recapitalised a series of banks that were experiencing real difficulties. We are working hard, as the statement by my right hon. Friend the Financial Secretary to the Treasury made clear, to get the banks to increase their lending activities directly. The asset protection scheme has led to agreement with banks on lending levels; an agreement on lending levels has been put in place not only with Northern Rock, but now with the Royal Bank of Scotland and Lloyds bank, as Members who were in the House at the time will have recognised. Lending levels will be increased to help viable businesses get access to the credit that they need.
	A number of hon. Members mentioned the enterprise finance guarantee scheme, which could offer up to £1.3 billion-worth of lending by banks to businesses. It is up and running and it includes all the main high street lenders. More than 400 loans—worth some £40 million—have already been guaranteed. Given the amount of interest in the scheme, I have no doubt that there will be more on offer.

Gareth Thomas: I shall come to the estimates shortly. I also wish to discuss the automotive assistance package, which will help car manufacturers and their suppliers. It is up and running, having got European Commission approval. There is a mix of loan guarantees and, potentially, loans to support some £2.3 billion-worth of lending from the European Investment Bank and other sources. A number of hon. Members raised other issues that are potentially of considerable interest to those in the car industry. A further meeting with car manufacturers and their suppliers will take place on Wednesday—it will be chaired by my hon. Friend the Under-Secretary of State for Business, Enterprise and Regulatory Reform—to go through what further help the Government can offer in that sector.
	I have alluded to the fact that we are also helping families who have run into financial difficulties as a direct result of the economic situation. A further £10 million has been provided to increase the number of face-to-face advisers in local citizens advice bureaux, and further help has been given to the national debtline so that telephone advice and support can be offered to people, some of whom are in very desperate circumstances. Again, that measure provides direct support and is making a real difference to families who are in trouble as a result of the recession.
	I should also remind the House that I met representatives of the credit card industry to agree new ways of handling the risks facing that industry—risks that have led them, on occasion, to cause real difficulties for people who have substantial loans to repay. Such ways include a new set of principles for handling how they manage the debts and an agreement to provide a breathing space of up to 60 days space for people in financial difficulties, to allow them to sort themselves out and be able to move on with their repayments.
	The single biggest measure that we have initiated to help businesses and families through the recession is the fiscal stimulus, which was unveiled by the Chancellor at the pre-Budget report and opposed by the Conservative party. The fiscal stimulus package includes a cut in VAT—the largest tax cut since 1988—putting money back into the pockets of shoppers and shopkeepers; an income tax cut of £1.4 billion; a £60 payment for pensioners; new help on child benefit; and £3 billion of capital investment. That provides real help to businesses now.
	I say gently to the hon. Member for Weston-super-Mare that it is a little rich to be lectured on providing support to businesses during a recession by the Conservative party, given that it was responsible for two devastating recessions in the 1980s and 1990s that cost thousands of jobs. Those recessions were directly attributable to the economic policies of the then Government. The striking thing about the Conservative party's approach, which includes opposing the fiscal stimulus, is that it is completely out of synch with the rest of the world. Doing nothing to help—indeed, it is now advocating significant cuts in public expenditure—is a reckless approach at best; it is certainly extremely dangerous. That approach is advocated by no major country.
	The return to the Front Bench of the right hon. and learned Member for Rushcliffe (Mr. Clarke) was trumpeted as bringing new economic literacy to the Conservative Front-Bench team. Given that he disagrees with his leader on VAT, on whether International Monetary Fund help will be needed and on the need for a fiscal stimulus package, and that the only thing on which he seems to agree with his leader is the need for the shadow Chancellor to have some help, I gently say to the hon. Member for Weston-super-Mare and his party that now is the time to rethink their approach.
	 Question deferred (Standing Order No. 54(4)).

Louise Ellman: I am pleased to open this estimates day debate on rail. There is no doubt that rail is great success story, but it also faces challenges related to the recession, and there are question marks over its structure and about whether it is achieving value for money. The Select Committee on Transport's report "Delivering a sustainable railway: a 30-year strategy for the railways?", which was published on 21 July 2008, considered those points, a number of which are being followed up by new inquiries.
	The report considered the rail White Paper, which combines the Government's strategy for the next 30 years with proposals for the next five years in its high level output statement. It anticipates the doubling of passenger and freight traffic over a 30-year period. The Committee welcomed the growth strategy but criticised the report for lacking vision, particularly in relation to high-speed rail and electrification. It is reassuring to see how much progress has been made on both issues since the Committee's report was published. They are both of critical importance and the Committee will be pursuing them. We are pleased that studies are being undertaken, but we want to see commitment to action within a realistic time scale.
	In today's debate, I want to concentrate on a number of key financial issues that challenge fundamental parts of the rail system as it operates today, as well as raising specific questions about the estimates before us. The Committee warned in its report that
	"if a full-scale economic downturn were to develop, passenger numbers are unlikely to grow as fast as projected in the High Level Output Statement. This situation could jeopardise the current hard-won level of financial stability."
	The latest information available from the House of Commons Library gives cause for concern. It shows a small reduction in the number of passengers in the third quarter of 2008-09 compared with the third quarter of 2007-08. The first two quarters of that year showed small increases compared with comparable periods in the previous year. If that trend continues and there is a reduction in the number of rail passengers or in the number of anticipated rail passengers, that will have major implications for the franchising system for rail services and rail finances.
	Public funding for the period 2009 to 2014 assumes a 34 per cent. increase in passenger revenues. Reduced numbers of actual or predicted passengers from those anticipated when companies bid for and acquired franchises could threaten the viability of rail services and pose a serious financial challenge for the Department for Transport. It is not clear in the estimates whether the scale of that challenge has been assessed or, indeed, provided for. In those circumstances the train operating companies might seek renegotiation of their franchise agreements. They might default on premiums due or seek to increase subsidies, perhaps activating the revenue sharing agreements that are already in place. They might try to reduce services—indeed, that has already started—or to walk away from their franchises. Concerns have already been raised about all those possibilities and jobs in the rail industry are already being shed.

Louise Ellman: It is important for passenger interests to be recognised and I think that Passenger Focus has done a very good job, but there is a need for more action and more teeth. I am not completely satisfied that the rail regulator is the right person to do that, but I take the hon. Gentleman's general point.
	How the rail companies might react in the face of recession and possibly declining passenger numbers has been raised with my noble Friend the Minister of State in the Department for Transport. He told the Transport Committee on 25 February that no train operating company had yet told the Department that it wanted to walk away, abandoning its franchise, but he did not deny that up to five red warning lights about train operating companies were flashing in his Department. He told us that the train operating companies would be held to their franchise agreements, but that it is often unclear exactly which services the train operating companies are contractually bound to provide. One issue that has raised great public consternation has been the plans to close booking offices. That is a matter of convenience for passengers, but it is also related to transport safety. My noble Friend informed the Committee that the Department had not agreed to go ahead with some booking office closures as requested, but there is still a serious question mark over those offices as well as over other services.

Norman Baker: Can the hon. Lady confirm the information that I have heard, which is that the train operating companies have been told that if they abandon or walk away from one franchise they will be expected to walk away from all the franchises that they hold? Some, of course, hold multiple franchises. Whether that is the correct system or not, does she agree that there are significant doubts about whether there is a default mechanism in place for the Department for Transport or any other mechanism to run a franchise that has suddenly been abandoned? There is no expertise there to do that.

Louise Ellman: The hon. Gentleman refers to a key section of the financial arrangements between the train operating companies that hold the franchises and the Department. He raises serious issues about what would happen if one or more than one train operating company sought to enable such a change to take effect. My noble Friend the Minister of State reiterated before the Committee that his Department was the operator of last resort. It is legitimate to consider what would happen if a number of train operating companies withdrew from their franchises or were unable to follow the agreements that they have entered into. That raises big questions about how train services would operate and it also raises major financial questions. What provisions have been made to accommodate that and what credibility would there be for operators who took up the new franchises when they saw how people who did not want to continue with their obligations were being allowed to renege on the agreements they had made. Those are big, serious questions and a realistic reading of the economic situation suggests that a crisis in railways or rail funding might not be far away. I want to seek reassurance that the Department is ready for such a crisis and is ready to address it so that the travelling public do not suffer.

Louise Ellman: I certainly agree with my hon. Friend in raising questions about the accountability of Network Rail and its structure. The matter was considered in the Select Committee's report. I am pleased to note that the members of Network Rail commissioned a special report to look specifically at governance, but it is a matter of some disappointment that Network Rail apparently does not wish to release the report, although I note that somehow it has made its way to the newspapers, and I do not think it will be kept secret for much longer. It is important that Network Rail reviews the way it is run, improves its accountability and looks again at the way its members operate, and the possibility of setting up a smaller supervisory board that could exert much more control and accountability.

Louise Ellman: What matters is that Network Rail improves its accountability and revisits its governance.
	I wish to raise one specific matter in relation to the estimates before us this evening. The explanatory letter accompanying the estimates suggests that the bulk of the additional network grant—£404 million out of the £447 million increase—is a grant from the Department for Transport to Network Rail to fund capital investment. It states that the increased contribution from the Department will be matched by a reduced contribution from the train operating companies, which will pay lower track access charges, and that the net effect on the train operating companies will be nil, yet it is not clear from the estimates exactly how that will be achieved. There is no mention of reduced funding to the train operating companies in the estimates. I should be grateful if my hon. Friend the Minister would inform us how the matter is to be addressed.
	In my remarks this evening, I have made a number of comments that go to the heart of the operation of the rail system in the current climate and point towards the way in which changes could be made for its future, but there is no doubt that rail has been and is a great success story for both passengers and freight, with a 40 per cent. increase in the past decade. The recession must not be allowed to set the railways back, and the Government must now rise to the challenge.

Norman Baker: I am even more grateful, Mr. Deputy Speaker.
	I followed with interest the comments of the Chairman of the Select Committee, who raised a number of important points of detail about the estimates. She also raised some fundamental issues about the structure of the industry in years to come, and I shall be interested to hear the Minister's response.
	We have seen, as we will doubtless be told by the Minister in his winding-up speech, a renaissance in the railways in recent times, with passenger numbers now at their highest since 1946. In response to that, somewhat slowly but finally, the Government are moving towards the high speed rail option that my party has been advocating for some years, and have adopted the electrification process that we have long advocated. However, I am concerned that the Department for Transport seems to be continually behind the curve and unable to deal with the problems that manifest themselves until they have been there for some time. Passengers suffer as a consequence.
	In my contribution, I shall speak about the problems relating to fares, overcrowding, rolling stock, and the centralisation instincts of the Department for Transport and the consequences of that for the rail industry. It is not satisfactory—the Select Committee Chairman referred to this—for the balance of funding to be moved ever increasingly towards the passenger and away from the taxpayer. That is not sensible in economic, social or environmental terms.
	Since 1997, the cost of travelling by train has risen 6 per cent. above inflation, whereas the cost of travelling by car has dropped 10 per cent. In case the Minister thinks I am particularly attacking the Government for that, I should say that that is a 30-year trend which, since 1977, has seen the cost of travelling by train rise by 52 per cent. and the cost of travelling by car fall by 10 per cent. over that period. Since 1977, regulated fares have increased by 43 per cent. on average.
	According to Passenger Focus, a standard commuter season ticket now costs around twice as much as it would cost in France. My party's research shows that for £10 one can get only 26 miles from London—that is, as far as Basildon—whereas in Serbia, which I admit is an extreme example, one can get 512 miles, which is equivalent to travelling to the Swiss alps, assuming that one could get to the Swiss alps by rail, which might be possible with high speed rail opening up.

Hugh Bayley: Yes, that is the case with top-line fares, but does not the hon. Gentleman acknowledge that many cheaper fares are available? One can get from York to London for £5 if one buys the right fare.

Norman Baker: We have set out in great detail in our policy paper the benefits of high speed rail and other rail improvements. Those come down to a £30 surcharge on domestic flights—we have been very open about that—and a lorry road user charge, and we have indicated how we would get more money out of existing train operating companies. That is all in black and white. I am happy to send the hon. Gentleman a copy of our paper. We are the only one of the three parties to specify how we would pay for improvements to the railway service in this country.

Norman Baker: The Office of Rail Regulation does quite a good job, but it is tied by its specific legal remit, which is to look at the delivery of Government programmes set some years in advance. Even though it may want to take account of changing circumstances, it is tied to an earlier Department for Transport policy. Its flexibility is the issue.
	I have mentioned only fares, but overcrowding is also of great concern to passengers. As we know, rail travel has increased dramatically in the past few years, but the consequence has been that overcrowding—particularly on commuter trains; not only those to London, but to places such as Manchester and Bristol—is increasing enormously. Part of the reason for that is the failure of the Government and the rolling stock companies, which are the architecture of the rail industry, sufficiently to predict the increase and to have in train—no pun intended—sufficient rolling stock to meet the challenge.
	At the moment, there is a grotesque shortage of rolling stock. There are virtually no trains anywhere in the country, and rolling stock is cascaded from one operator to another as if in some sort of merry-go-round—Southern takes some stuff from South West Trains, and then some more carriages are handed over to First Capital Connect. There are not enough trains. There are many examples across the country of passengers being asked to travel in grotesquely overcrowded conditions. The other day, for example, I was on the train from Newport to Hereford—

Norman Baker: I am afraid that that is the case. Many operators are reducing the number of carriages through necessity because there are none, or did so early on—perhaps three or four years ago—because it suited them better to pay less by way of track access charges.
	The Government have continually said that they have ordered 1,300 or 1,400 new carriages, and the indication has been that the order is being speeded up and the carriages are being delivered as soon as possible. Announcements are made at regular intervals to tell us how it is all getting on. Yet a parliamentary answer to me from the Minister, dated 4 March, said that the last of the trains from the InterCity express programme will not come until 2018. Some of the delivery periods for the new trains are very long.
	It all comes back to the statement on rolling stock that the Secretary of State for Transport made the other day. He spoke in complimentary terms, saying that the trains would be greener, more environmentally friendly and good for British jobs. We now know that the consortium was not British-led, although that is how the Department for Transport described it. It was a Japanese-led consortium, with John Laing as a minor partner. Furthermore, of the 12,500 jobs talked about, 10,000 are existing jobs at third-party companies that may conceivably benefit over the lifetime of the billed contract; even the other 2,500 jobs are disputable as the initial 70 engines and carriages are being built in Japan.
	When we read the small print of the "good news" for British industry announced by the Transport Secretary, it disappeared and vanished into the ether. As far as the statement that the new rolling stock would be green and environmentally friendly is concerned, the claim was that the stock would consume less energy. That, however, is not correct: when we divide the total energy consumption based on total passenger capacity of the rolling stock, with a new, greater seat complement, we find that it is less energy efficient than the inter-city trains that it is replacing. I mention that because, apart from the fact that it all seems expensive and that there seems to be an environmental question mark over the Government's train-ordering process, we are moving away from rolling stock leasing companies towards a more centralised ordering of trains.
	The Government have made clear their dissatisfaction and unhappiness with the ROSCOs—the rolling stock leasing companies. I do not want to defend the privatisation foisted on us by a previous Conservative Government; in many ways, that failed and we are still picking up the pieces. Furthermore, the creation of ROSCOs enabled a great deal of money to be made to no real benefit, especially in the early days. But we are where we are. The Government do not like the ROSCOs and referred them to the Competition Commission, whose draft report indicated that the issue was a boomerang from the Government. The Government largely got the blame for the arrangements, not the ROSCOs. The Government's response has been to take hold of the InterCity express programme and order a train that is overpriced, not energy efficient and does not particularly help British industry.
	On top of that, last week Diesel Trains Ltd, a new rolling stock company that is owned by the state, was set up. We are told that it will produce a whole lot of new diesel trains. That is rather curious: how will that give an incentive to the ROSCOs to produce trains on spec, as they have been, in anticipation of orders? If they are to be squeezed out of the rolling stock market, they will have no incentive to build anything other than on the basis of firm orders. If they build only on that basis, when passenger numbers pick up—and they are doing so, in fact—there will be no rolling stock for the train operating companies to get hold of. That is precisely what is happening at the moment. The Government's over-centralisation of rolling stock ordering is causing a shortage of rolling stock rather than solving the problem, as the Government say they are doing.
	The public sector ROSCO that I mentioned is being created by the Government in direct competition to the private sector. The hon. Member for St. Albans—

Norman Baker: We are not against all privatisations; we take each issue on its merits. To be frank, there were elements of rail privatisation that were unsuccessful. The train operating companies have largely been a success. However, Railtrack was a disaster, which has now been sorted out. Network Rail in its current form was originally a Liberal Democrat proposal, but the ROSCOs were not a successful creation. Some elements did not work, and some did. We now have to see where we are and how we can best build up the industry without throwing all the pieces up in the air and trying to restart the machine, which would cause years and years of chaos and more legislation and uncertainty.
	We should try to correct the many problems that exist. My case on the ROSCOs is that the Government are making the situation worse by creating Diesel Trains Ltd without having thought through the consequences. One consequence is that there will be a relationship between train operating companies and Diesel Trains Ltd. What will be the contractual arrangement between those two bodies, given that Diesel Trains is owned by the Government? Where will be the shouts of, "Foul!" when the train operating companies object to the terms imposed on them to get their diesel trains? I see all sorts of problems.
	There is also the question of whether the ROSCOs are in some way already nationalised given the stake that the banks have in them and that the Government now have in the banks. Whether the Government are seeking to influence the ROSCOs through that process needs to be clarified. I hope that the Minister will respond to these issues. Over the past couple of years, there have been several moves on this, almost through the back door and without any clear indication what the Government's policy is, so let us have that outlined today.
	One of the solutions to the rolling stock problem would be to give the train companies longer franchises. We advocate rolling franchises with a 30-year lifespan that is reviewed every five years. Providing that passenger satisfaction targets are met the franchise would stay with the company that was awarded it. The advantages of that would be twofold: first, the train companies could look to getting their own rolling stock, thereby bypassing the ROSCOs, which could be a useful step forward; and secondly, it would enable them to plan ahead and see the financial case themselves for infrastructure improvements, which we have not seen to any large degree so far in the 10 years of this Government. For example, Chiltern Railways is effectively creating a new line between Oxford and London as a consequence of alterations that it is making to one particular section of the track, and that would not be possible unless it had the long franchise that it does.

Eric Martlew: The hon. Gentleman suggests that we should have a 30-year franchise so that people could plan ahead but then says that it would have to be reviewed every five years. I presume that it could therefore be cancelled every five years, so it would really be a five-year franchise.

Norman Baker: In that unlikely scenario, it would be perfectly possible to have an arrangement whereby we had investment of last resort or had the franchise for the following 30 years awarded earlier than the expiry of the 30-year period in sufficient time for rolling stock to be ordered for the following period. The problem would be easy to get round. Although I am happy to accept that any scenario will have difficulties, I argue that the difficulties presented by my suggested solution are far less serious than the ones presented by the current arrangements, whereby no investment takes place from the train operating companies in rolling stock or in anything much else given the limited range of franchises.
	I want to refer to the centralisation of the Department for Transport. In Ministers' efforts to improve the railways—they have got hold of where they need to be improved and invested in; I am grateful that are seeing a sea change from the laissez-faire approach of a few years ago—their instincts are to intervene more and more in small details. That is wrong in terms of rolling stock for the reasons that I have given. It is also wrong in terms of some of the timetable arrangements that are being imposed on the railways. We have just seen a new timetable produced for the Southern region that has been catastrophically ineffective and caused a record level of complaints to the train company, which is not responsible for the problems that have arisen. The problems in the Southern region are a consequence of the Government giving in, as they always do, to the aviation industry—at Gatwick in this case—so that a timetable has been constructed that suits Gatwick airport and, frankly, screws the rest of the Southern network. That is a direct consequence of the Government's intervention. They overruled the preferred timetable from Southern and from Network Rail, which should have maximised journey opportunities for those in Brighton and other areas of the south coast, including my constituency. I fear that we are moving towards a situation in which Department for Transport officials intervene to micromanage in a way that is counter-productive in terms of delivering a good railway. We need to ensure that we expand the network.

Norman Baker: I certainly agree that significant lines used only for freight could be used for passenger services. Some go to quarries, and would be less used by passengers, but others could be used in that way—for example, Exeter to Okehampton in Devon. Okehampton is not served by passenger services except on some days in summer, but there is a perfectly serviceable line that could be used for a regular commuter service.
	It is not sufficient to argue, as the Government have, that expansion is simply a matter for Network Rail, which is then constrained by the Office of Rail Regulation. The ORR operates on a past Department for Transport policy and is unable even to agree, say, to the doubling of Swindon to Kemble line, which everybody in the rail industry accepts is a sensible proposal that should be taken forward. We have not seen a plethora of new or reopened lines or stations, despite the growth in passenger numbers in the past 10 years, and those that have come have done so almost in the teeth of opposition from the Department for Transport: I am thinking of Stirling to Alloa and the Ebbw Vale line in Wales. The devolved Assemblies and Governments have been producing the lines, not the British Government here, who have delivered almost nothing in the way of improved rail connections in England since 1997. That is very sad.
	As the hon. Member for Wansbeck (Mr. Murphy) said, a plethora of lines and stations should be considered for reopening. I must mention Lewes to Uckfield, of course, but there are plenty of others up and down the country. Yet it seems that the Department for Transport still has the mindset that money spent on roads is investment and money spent on rail is subsidy. We have to change that if we are to meet the environmental and economic challenges ahead. A longer franchise agreement for 30 years would enable train companies to look at what might be sensible for them to invest in without even having recourse to the public purse. Essential to that is the reform of NATA—the new approach to appraisal—which is the archaic formula that the Government use to work out the benefits of rail schemes. Under NATA, if a new rail line is opened, a calculation is made as to how many people would transfer from road to rail, and the Treasury then counts the loss of fuel duty as a disbenefit to the scheme. It is hardly surprising that lines do not open given that sort of mad economics. The Department continually underestimates the number of passengers. Stirling to Alloa, for example, has seen a massive increase, way above the projection given for passenger numbers.
	It is important that the Minister comes clean on his plans for ROSCOs; on his plans for fares, giving passengers an assurance that they will not be cascaded through the roof; and on what he is going to do to tackle the overcrowding on trains and the centralisation at the Department for Transport.

Eric Martlew: I thank the hon. Gentleman for correcting me: it cost £8.8 billion. The estimate given by Railtrack was £13 billion, and nobody in this Chamber believes that it would ever have been completed by Railtrack. I would like to pay tribute to my right hon. Friend the Member for North Tyneside (Mr. Byers), the Secretary of State who had the courage to put Railtrack into administration. If he had not done so, we would not be talking about a successful railway today. Hon. Members should remember that our railways have the most advanced rolling stock of anywhere in Europe, but listening to the comments from the Liberal Democrat spokesman, one would not believe it. We have the most passengers using the railways since the 1950s and there has been a massive increase in freight. That has all taken place over the past 10 years.
	We are talking about a railway that is successful, but it still has problems. A very good report was published last month, called "Fares and Ticketing Study". When looking at it carefully, I found that it asked a lot of questions, one of which is: "What is the cost of a rail ticket?" The answer, of course, is that nobody knows. One day it is this, the next it is that, and if we look a bit later, we find the price has gone up again. I would like some sort of price list on the window at the station saying how much people will actually pay for a ticket. There is no doubt that the train companies are creating confusion, which is benefiting them.
	My hon. Friend the Member for City of York (Hugh Bayley) mentioned that people can get a £5 ticket, and I am sure he is right, but many of us believe that it is easier to win the lottery than to get such cheap tickets. We just do not know about them. There is no transparency, but there should be. We need transparency from the train companies. The Government did a lot of work simplifying the fares this summer, because they used to be even more complicated, but we need to know their true cost. We need a system whereby the difference between the highest price and the cheapest price is reduced.
	On the Manchester to London line, there is now a fast, efficient train every 20 minutes. We almost have a system whereby someone can walk to the station, get the train and go—it does not matter if they miss one because they can catch the next one. However, people cannot do that because they would then have to pay the highest price, which penalises them. Even though we have a train every 20 minutes, people have to book, sometimes weeks in advance, to get a reasonable price.

Eric Martlew: I agree totally with my hon. Friend. For someone travelling from Carlisle to London, it may be cheaper to buy a single to Preston, and then one from Preston to Crewe, and then one to London. That makes no sense. If British Rail did one thing, it was to tell people the price of a ticket, and they knew what they were paying for. That is not now the case. The Government tried to simplify matters, but we have to go return to this issue and give people reasonable value for money.
	The Chair of the Select Committee, my hon. Friend the Member for Liverpool, Riverside, made pertinent references to the price of the tickets. I am not sure that any of us in this Chamber have yet said that we should increase the subsidy. If we are to reduce the price, or keep it the same, we can do two things: we can increase the subsidy or we can reduce the amount of investment in the railways. The latter would be a major problem for us. It could easily be done and nobody would notice. My understanding is that the Conservative policy is to build a high-speed line from existing resources. That would mean that the maintenance of the rest of the line and the upgrade of the rest of the railways would be reduced—it is a sleight of hand. We need to decide among ourselves whether there will be extra subsidy, or whether money will come from the fare box.
	During the previous debate, I made the point that there are parts of the country—my constituency is one—where people rarely use the train. Unlike London, their public transport system is made up of buses, and in urban areas those buses are not subsidised. In the big commuter areas, fares are considerably subsidised. If we are saying to my constituents, who might get on a train once or twice a year, that they should pay more subsidy to the railways so that other people will benefit, we should make that clear. But people should remember that not everybody uses a train very often.
	I am conscious that I am coming to the end of my time. We have a railway that we can be proud of, but we are reaching a point where we are going to hit major problems. To get out of the recession and overcome the problems that the rail companies have, we will have to put in more subsidy. What we must not do is lose track of what we are about: creating a better railway for the future. We will get over this recession. We may have to put more money in, and perhaps later we can take it out again, but we should not start making major cuts that would mean we did not have a railway that was fit for purpose when we came out of the recession.

Daniel Kawczynski: The railway station in Shrewsbury is important because it is the first thing that many tourists see on arrival in our county town. Tourism is extremely important for us—it is our No. 1 income generator—and first impressions count. I can tell the Minister that the staff at Shrewsbury railway station are excellent. They are friendly and helpful and I pay tribute to the work that they do. They certainly make the experience of visiting Shrewsbury station more enjoyable.
	We do, however, have certain problems such as weeds on the tracks, peeling paint, dirty tracks and various other aesthetic problems at the railway station. I would like to clear it up myself, during the recess. I would like to spend a few days with some volunteers clearing up the weeds and doing a bit of painting, but with all the health and safety legislation now in place, it seems quite difficult to organise. I would like to ask the Minister whether he would agree to help me to organise a clean-up of Shrewsbury station, and whether he would join me during recess. If he could organise that, we could both paint a few peeling walls.
	I asked the chief executive of Arriva trains to come to Shrewsbury, which he did, and he said that the problem is—I made this point earlier when I intervened on the Chair of the Select Committee, the hon. Member for Liverpool, Riverside (Mrs. Ellman)—that there is misinformation about who is responsible for maintaining and looking after various facilities, even a whole structure. In certain areas, parts of a structure above 2 m high are the responsibility of Network Rail and parts under 2 m are the responsibility of the train operator. I am exactly 2 m tall, so in those areas anything above my height is the responsibility of Network Rail. That simply cannot continue. I urge the Minister to bang a few heads together at Network Rail and the train operating companies, so that there is clear accountability as to who is responsible for maintaining and painting bridges and other structures at railway stations.
	In Shropshire, we fought very hard to get a direct rail service from London to Shrewsbury. We were the only county town—apart from that of the Isle of Wight, for obvious reasons—without a direct rail link to our capital, and my No. 1 pledge in my election manifesto in 2005 was that we would get a direct rail service. We now have that service. It is the Wrexham to Marylebone service, which passes through Shrewsbury. Again, the staff are fantastic, the trains are punctual and the service is extremely good. That brings more tourism and business investment into Shrewsbury.
	However, there have been extraordinary problems with Arriva and Virgin Trains trying to scupper that service since its birth. They have used their size to try to cajole and manoeuvre the Office of Rail Regulation to put in place as many impediments as possible. I urge the Minister in all sincerity to do everything possible to ensure that such large operators are not allowed to use their size to try to snuff out competition from other important rail companies that initiate vital services.
	One thing that hampers progress for people using the train is a lack of car parking facilities at stations. I am sometimes prevented from using the direct rail service because there are no spaces in the car park next to Shrewsbury station. It is shared with the post office, and there are a lot of post vans there. I urge the Minister to redouble his efforts to ensure that more investment is put into increasing the number of car parking spaces next to railway stations such as that at Shrewsbury.

Graham Stringer: I want to make four or five points, then I will give way.
	Salford Crescent is a pinchpoint, next to where the routes to Wigan and Bolton meet. There are only two platforms, which take five trains. Salford council, the urban development company in the area and all the partners would like investment in that site so that there can be four platforms to ease congestion. That would benefit the whole of the north of England and start balancing investment between the north and the south of England. It would also be good for regeneration, and a bus station could be sited there.
	My next point is about investment. High-speed rail would be good for the whole country and getting rid of the congestion in the Greater Manchester system would be good for the north of England. The Government have said that they want to bring forward expenditure. We recently had a debate on the transport innovation fund and "congestion-TIF", as it was called. The people of Greater Manchester rejected that, but the money is still sitting in the pot. I do not see the point of leaving it hanging around for three or four years, when it will probably disappear, given that the economy needs that investment now. It should be transferred to a productivity pot for which all districts and councils in the country can bid. Otherwise, it will not be spent. In Greater Manchester, it would be best to spend it on tram links or heavy rail links to Manchester airport, which is one of the major international access points to this country. That would have an economic benefit.

Graham Stringer: Carbon dioxide costs become negative at over 200 mph approximately. There is a big change around point at that speed. Of course, very few people fly between Leeds and Manchester, but having a route the whole length of the country would take some passengers off aeroplanes.

Graham Stringer: The hon. Gentleman is right.
	My next point deals with the conundrum of expenditure on Network Rail. If one imagines British Rail with the number of passengers that now travel on the rail system, and an average of £5 billion of subsidy every year—in real terms, approximately three times what British Rail had—it would be in huge surplus. That is the first indication of inefficiency in the Network Rail system. I have asked many Ministers why rail in this country costs so much. The answer is beginning to become clearer. One obvious answer is that 100 companies are now involved in the railways, with 100 chief executives, 100 finance officers and 100 bottom lines, out of which to make profits. Obviously, that costs.
	There are also perverse incentives. When lines are closed, Network Rail pays the train operating companies. If a business is to benefit from something—investment means that the railway system will be getting better for those train operating companies—it normally pays. We are considering a perverse incentive and a perverse reward.
	I guess that most people do not know the next reason for the cost of Network Rail. When Network Rail closes a line for improvements or because something has gone wrong, it puts on buses, and calls that—it is a dreadful word—"bustitution". Twelve of the 13 major rail franchises that bus companies run effectively use themselves as agents. Arriva uses Arriva; National Express uses National Express; FirstGroup uses FirstGroup; Stagecoach uses Stagecoach and so on. That means that anyone bidding does not get the bus service operator grant because it goes to the agent of the main company. There is very little control over the costs.
	I have talked to representatives of bus operating companies that have been put out of business because they do not believe that they can compete with bodies that effectively award the contracts to themselves. They are told that it is a matter of quality as well as price, but when one talks to the bus drivers, one finds that the agents pay two and three times what the competitors would pay. There is a cost to Network Rail and there is, therefore, a cost to the public purse. I have talked to several bus operators. One—Fraser Eagle—was recently put into administration. It believes that that has happened because of those unfair, if not corrupt practices by train operating companies that also run the buses. Those are most of the points that I want to make.
	I say to my hon. Friend the Member for Carlisle (Mr. Martlew) that it makes sense to run a high-speed line into the main centres of population, but that does not mean that when the line is a success, as it undoubtedly will be, we cannot have tracks running off it. We are talking about a huge investment over a long period. The £60 billion of benefits from a high-speed line that were identified in the second Atkins report will come about only if it goes to the major centres of population. Let us make that a success and then we can have routes to Liverpool and up to Carlisle and Glasgow. We should not limit our horizons in seeing what high-speed trains can do for this country.

Stewart Jackson: It has passed into folklore that the privatisation of our railways was a disastrous error, without mitigation, that it was driven not by pragmatism and necessity but by ideology, and that it destroyed a golden age—I was almost misty eyed listening to the hon. Member for Carlisle (Mr. Martlew)—between Dr. Beeching's axe and the mid-1990s and the Railways Act 1993. There has never been any evidence for those assertions or for the lazy received wisdom of the commentariat and those with an axe to grind.

Stewart Jackson: I will not. I will make some further progress.
	Critics point to the disaggregation of the railways after privatisation, but they disregard the growth in passenger numbers and the increase in rail freight that followed on from those structural changes, as well as disregarding better punctuality and safety and enhanced investment in stations and rolling stock. It is an inconvenient truth that privatisation arrested a 50-year decline in freight traffic. After all, if privatisation was "a privatisation too far", the key question is: why did the Labour Government never renationalise the railways?
	The political agenda of this Government from 1997 was viscerally hostile to Railtrack and, later, to the rail regulator. They pursued a policy of undermining the system of rail governance by stealth, in a quite deliberate and cowardly way, eventually forcing Railtrack into receivership and seeking to destroy it by subversion, as they had neither the political courage nor, most importantly, the taxpayer funds to renationalise the railways. In addition, despite paying lip service to the unreconstructed left on their Back Benches, even this Government had to concede that privatisation was a success. Private investment into the rail system rose by an unprecedented level, from £120 million in 1995 to £1.4 billion in 1997.

Stewart Jackson: I will not invite the hon. Gentleman to intervene again, as time does not permit.
	The former rail regulator wrote last week in  The Times of his experience of "government by vendetta", as the then Secretary of State for Transport, with the connivance of the then Chancellor and now Prime Minister, used threats of primary legislation to avoid the inconvenience of contractual liabilities between Railtrack, the train operating companies and the Government. The defenestration of Railtrack in October 2001, the traducing of the independent regulator and the duplicity inherent in so much of this Government's modus operandi represented a shattering blow to private sector confidence and to the prospects for long-term investment, from which some might argue the rail industry has yet to recover.
	That brings me to the east coast main line franchise, which is of particular interest to my constituents. Its current holder, National Express East Coast, won the franchise in August 2007 after the previous franchisee, GNER, was forced to relinquish it after 11 years when its parent company, Sea Containers, applied for chapter 11 bankruptcy status in the United States. National Express East Coast's franchise payments are due to grow steeply in the next five years, from £85 million to £395 million by 2015. It has already made 750 people redundant, and it is pursuing a major cost-cutting programme in addition to being encumbered by a £1.2 billion debt. In order to meet its next payment on the east coast of £133 million, the company needs revenue growth of 10 per cent. and an estimated increase in passenger numbers of 4 per cent. That will need to happen against a background of falling passenger journeys and declining passenger revenues across the country in the year to December 2008.
	One wonders whether any comprehensive analysis of the macro-economic impact of a recession or depression on passenger numbers, income streams, debt servicing and liquidity was undertaken by the company, the Office of Rail Regulation or the Department for Transport in August 2007. In the absence of any undertaking by Ministers to assist the train operating companies, we could be forgiven for asking two pertinent questions. First, was the east coast franchise overpriced and a product of Treasury greed and myopia? Secondly, what is the Government's plan B, if the costs prove prohibitive for the company? The medium-term financial viability of the franchisees on the east coast main line is integral to Network Rail's proposal to upgrade Peterborough station over the next few years, and that project is inextricably linked to the regeneration of Peterborough city centre and the economic competitiveness of the greater Peterborough travel-to-work area.
	My hon. Friend the Member for Chipping Barnet (Mrs. Villiers) is on record as wishing to move to a culture of longer franchises in order to facilitate more stable business planning and investment and less interference in the day-to-day running of the railways by the Department for Transport. Certainly, the idea of renegotiating franchises to deliver a worse service, at the same time as increasing fares, would be the worst option to pursue, as the Campaign for Better Transport has stressed. It cannot be impossible for the Department for Transport to undertake a modelling exercise, or even a pilot programme, in which the retail prices index plus 1 formula is revisited and fares could be reduced.
	According to the Office of Rail Regulation, ticket prices have risen by 13.6 per cent. in real terms since 1995, yet passengers consistently complain of poor service and a lack of value for money. Indeed, I am sure that my constituents who use First Capital Connect to travel to King's Cross will have been reassured by the comment of the Department for Transport spokesman, who said in June 2007 that rising fares were
	"a good commercial solution to the problem of overcrowding."
	Above-inflation rises in fares are a sure method of driving people back into their cars and losing their custom, possibly on a permanent basis.
	My party is a strong supporter of rail, not least because it is a low-carbon mode of transport, and of enabling people to make intelligent choices other than those involving ever greater car journeys. Over the past 12 years, the Government have failed to tackle the issues of overcrowding on our rail network and achieving better value for money for our railways. Why, for instance, is a walk-on train fare on average almost five times as expensive as an advance ticket? Why is our ticketing system still so complicated? If the Government are truly committed to sustainable transport—I speak as someone who represents a sustainable transport local authority—why did it take them 11 years to launch the 31 pilot schemes for station travel plans, following on from the rail White Paper published in 2007?
	Are we surprised that some lines are operating at 170 per cent. capacity and that passengers are paying more for an inferior service? On a related point, there is little evidence of any co-ordination between the planning of rail services and either the development of other transport infrastructure or large-scale housing developments in areas such as my own, the south midlands and the Milton Keynes sustainable growth area.

Norman Baker: The hon. Gentleman seems to be arguing against the commercial decision taken by National Express to bid as it did for the franchise and the commercial decision to set the tickets prices that it has set, but surely those are examples of the necessary consequences of privatisation which encourages such decisions being made in the first place.

Stewart Jackson: I do not agree with the hon. Gentleman. The superstructure of rail governance has been set and established by this Government at least since 2001—post-Railtrack—so it was incumbent on them to make the necessary changes.
	My party has called for an overhaul and reform of the transport innovation fund in order to allow very local sustainable capital projects to be facilitated by local authorities and other key partners such as urban regeneration companies and community rail partnerships. We need to think local and to think small.
	Let me finish by looking at the issue of the high-speed rail link. It has been looked at by my hon. Friend the Member for Chipping Barnet, and it is a coherent policy. Quite frankly, the reaction of organisations such as the Institute of Directors has been like Pavlov's dog, which has sought to rubbish our proposals. The viewpoint of those organisations and Labour Members has been short-termism. High-speed rail links work; they have social and environmental benefits, as well as massive economic benefits, as the hon. Member for Manchester, Blackley (Graham Stringer) mentioned. We have a coherent programme which is also costed to bring economic benefits, particularly to the north of England.
	This Government have had 12 years of economic growth, built on the solid foundation of a Conservative Government, in which to tackle the endemic problems in the railways, whether they be overcrowding, reliability, fare increases or whatever. By low politics and skulduggery, they have failed to deliver what people expected of them. In so many areas, they are exhausted, bereft of ideas and resorting to stealing Conservative ideas. They have run out of steam and in 14 months' time, they will be out of office.

Mark Todd: The recent decision to award the Intercity Express programme for 1,300 carriages to the Agility consortium has already been mentioned by the hon. Member for Lewes (Norman Baker) and I would like to expand on the subject. As he said, the consortium is based on Hitachi, a Japanese supplier, and the decision has been greeted with anger and gloom in Derby—the home of Bombardier, which employs 2,200 people in the area with a large supply chain concentrated close to the city; it is the only major rail manufacturer in the UK. Obviously, as a Member whose constituency includes part of Derby, I am concerned about that and I want to share my concern with the House. I shall develop four points in that regard.
	First, the commitment to British manufacturing and technology within the Hitachi bid is, to date, extraordinarily light. It seems likely that its tender will commit only to assembly and maintenance in the UK; the reference to 70 per cent. of jobs being here is largely based around the maintenance activity, which is already located here. No growth in employment is being offered.
	If, as the Government stated in their announcement, we are to place the UK in a strong position for rolling stock supply across Europe, it is critical that any contract ensures that high-value manufacturing of the vehicles takes place here and that the technologies to support that development of the industry are based in the UK. Mere kit assembly will proffer us no competitive advantage whatever in a European marketplace. It is intriguing to note that the welding technology that Hitachi has claimed as being critical to its bid and unique to its company was actually originally developed at the Welding Institute at Abingdon. The company has certainly supplemented that technology over time, but must we see our key technologies in a sector that we used to dominate once again reliant on foreign exploitation?
	Secondly, the scale of UK employment in the Hitachi bid has been questioned. Hitachi itself has not made the claim, but the Government have stated that 12,500 jobs will be created or secured. It has so far proved impossible to get close to that figure, which appears to have been based on the fact that in its bid Bombardier quoted 12,500 jobs created or protected, but the company already had a large base in the UK that the project would indeed have protected. It appears that the Government's estimate is based on the unrealistic multiple of four supply chain jobs to every one directly employed job. Most people would regard that as an exaggeration and would consider that a ratio of about 2:1 might be closer to reason.
	So far, Hitachi has had limited contact with the supply chain network in the UK, and the company has specified that it is in discussion with 20 supply chain operators. The Derby rail forum, which encompasses the supply network in Derby, is far larger than that. Hitachi already has some relationships with Derby-based companies, but it seems most unlikely that the company will be able to achieve an integrated UK supply chain. There is genuine anxiety about where it will serve a large proportion of the high-value supply chain business from.

Mark Todd: I agree 100 per cent. It is most unlikely that the local supply chain will enjoy the multiplication of opportunities that a Bombardier-awarded contract would have given.
	My third point is that since the new Secretary of State at BERR has returned from Europe he has brought valuable experience of manufacturing clusters. The principle, long established in many countries, is that businesses in particular industries cluster in particular regions. That makes the sourcing, training and retention of skilled labour easier and the sourcing of materials and services from which no business derives competitive advantage easier and cheaper, and allows the location of shared infrastructure.
	The area around Derby is the only major manufacturing centre in the UK for rail technologies. It thus has a test track for vehicles and a large concentration of supply chain businesses. Highly skilled engineers and technologists find a ready market for their skills. Without wishing to be negative, I think Hitachi appears to be considering manufacturing in parts of the country where nobody has manufactured a train for 100 years. If we are to build an internationally competitive railway technology sector, we should ensure that it has critical mass and that it concentrates its capacity as efficiently as possible. There is no case for determining location on the basis of grants that may be available or generalised labour availability.

Mark Todd: I certainly share my hon. Friend and neighbour's doubts. Much more thorough disclosure is needed of the thinking behind the awarding of the contract. The data issued so far have failed to satisfy most of the questions that could be put, both about labour utilisation and the value of the contracts issued within the UK.
	The fourth point is that one wonders whether the right choice has been made anyway. The full reasons for awarding the contract to Agility have not been disclosed, but I understand that price was the critical factor. Was it the case that technology differences—for example, the use of lighter vehicles—increased the initial cost of the Bombardier bid? We all accept that constructing lighter vehicles is likely to be more expensive at first, but it might gain greater efficiencies in fuel utilisation over the life of the vehicles. How was that factored into the assessment of the technologies offered by the various bids?
	Were both bids compliant with the technical specification in the first place? I would welcome a clear analysis of that. Is Hitachi equipped to supply an order of such scale? I understand that it is 12 months behind on a contract delivering trains to Australia, and has subcontracted substantial elements of that work to China. Is that the sort of future that we can expect on the fulfilment of the contract under discussion?
	The Government have a period to reflect on the contract before committing to it. If they must pursue the Agility tender, they should focus strongly on the manufacturing strategy that was said to lie behind that decision—ensuring high-value manufacturing, access to and exploitation of key technologies, utilisation of existing supply-chain businesses and rational location choice to maximise competitiveness and quality.

John Pugh: I recognise, as everyone does, that railways are expensive and heavily subsidised. I believe that that is partly a result of the legacy of botched privatisation, about which other Members have spoken, which leaves an unworkable and bizarre structure in place. It leads to unclear accountability, needless friction, short-termism, and virtual private monopolies such as ROSCOs.
	Despite that, we all recognise that railways are needed more than ever—by the traveller, who cannot cope with road congestion; by the environment, which cannot cope with car pollution; and by the economy, given the capacity of railway to transform and boost the local economy. I agree entirely with the hon. Member for Manchester, Blackley (Graham Stringer), who made precisely that point. Like him, I am also concerned that although we appreciate the need for rail, our appreciation of that need is fairly selective.
	Let us consider rail expansion and investment. London has Docklands light railway, Thameslink and Crossrail. The Government have already made a £5 billion investment in a £15 billion scheme under the most expensive real estate on the entire planet. Millions have been spent on lawyers, millions have been committed to buy off objectors, and millions will be spent on consultants. Hours and hours of Members' time—some of them are present—has already been used up on the project to join Heathrow to Canary Wharf, and to get those financiers, who do us so much good, and some other people, across London a little more quickly.
	We are promised new trains, and the provision of new carriages has been announced recently. Some of those will appear—it is a matter of faith with me. But where will they go? Out of the first 1,300, 900 will go to London. London already has an excellent tube system, which is to be completely refurbished—it is a public-private partnership, it is not ideal, and we do have Metronet, but, still, it is being refurbished. London has the best bus service in Europe. If the only problem London has is bendy buses, it is in an enviable position. If the only thing one has to worry about is how much the buses bend, one has worries that other people would be quite happy to have if they had a decent bus service. London will get more and more.
	However, what about the north-west, which I represent —the place where the railways began and where rolling stock is the most ancient? There is not a penny to be spent in extending track in that area—not a foot and not a rail. We struggled to get freight smoothly off Liverpool docks, even though there was an unassailable case for it, and the project would have taken place at first sight in London had it been mooted. We are told that Liverpool Central station in Merseyside is suited to a modern city, although in fact it is an absolute pit and a King's Cross waiting to happen.
	When we complain—and we do complain—we are reminded by the powers that be of the over-cost west coast main line. We should be content, it seems, to know that huge sums are being spent not only in London, but on getting us provincials to London, perhaps a few minutes earlier than we got there before. After all, what more could colonials like us expect? Greater connectivity between northern cities? There is not much of that. A quick journey across the country? Anyone who has tried it will know how difficult it is. That seems to be asking far too much of our current masters. Moreover, there is no real promise of carriages for Northern Rail.

John Pugh: Well, there you have it. We already have some of the oldest stock in the United Kingdom. We have bus chassis on rail: that is what some of those 142s are. We also have some of the most overcrowded overground trains, particularly those coming out of Manchester. We have critical but entirely soluble snarl-ups on the network, again around Manchester.
	Ours is a supplicant attitude, evident even in our approach to new schemes. In the north we have good, viable, non-anorak-type schemes, predicated on rational expectation of increased passenger numbers and increased profits—schemes that would genuinely boost local economies. I am thinking of, for instance, the Burscough curves, the Halton curves and the Todmorden curves. All those are do-able with the lawyers' fees, the consultants' fees or the tea money set aside for Crossrail. They are small schemes with big local benefits—genuine benefits.
	So sad is our psychology in the north-west, however, that we do not work together on such schemes. We know that the chances of the railway raj in London helping us are not that good. We hope that it can be cajoled into possibly doing something some time, although possibly not other things. We compete for attention. The net effect is that our London masters at the Department for Transport say "You cannot expect us to do all these things", and then do none of them. They carry on laying the track in London, digging the tunnels in London, and spending the billions in London. It is a case of "Divide and rule".
	Let me issue a challenge. Disraeli spoke of two nations, referring to the rich and poor. I could speak, in transport terms, of two nations, north and south. However, I can be proved wrong. All that is needed is for some kindly soul in the Department to show me one yard, or one metre, of new track in the north-west. I do not mind whether it is in Todmorden, Halton or Burscough. I will reduce the demand: I should like a train less than 20 years old to arrive in my own town, at Southport station. But I am not holding my breath.

Hugh Bayley: I want to explore some ideas about the role that our railways could play to help our country out of recession. The railways are vital economic arteries connecting businesses to markets, and connecting the north and west of the country to London and the south-east. As we heard earlier in the debate, they carry more passengers now than at any time since the second world war. I believe that the Government need to adopt policies that will reinforce the role that the railways can play in helping our country to emerge from recession in three specific ways. First, they need to encourage business confidence, especially in core railway businesses such as the train operating companies, Network Rail, and the infrastructure companies that build, maintain and renew the track. Secondly, they need to ensure best use of our existing assets by means of more efficient timetabling. Thirdly, they need to provide as much new investment as possible to stimulate economic activity and safeguard jobs in the industry.
	These are uncertain economic times, but the Government can boost business confidence during the downturn by creating greater certainty in the industry. As has already been mentioned in the debate, two years ago GNER, a train operating company that was well regarded by both the industry and the passengers who used its services, lost the east coast main line franchise. Its successor, National Express East Coast is doing well, but the hiatus when the GNER franchise collapsed lasted for a year and created uncertainty both in the rail industry and for businesses up and down the east coast line that rely on that railway service to reach their customers and markets.
	We must remember that GNER was forced out of business, first, because its parent company, Sea Containers, ran into difficult trading conditions in north America, which faced the economic downturn earlier than us in Europe, and secondly, because it faced uncertainty over the competition it had from open-access operators. I would not want National Express East Coast, or any other train-operating company, to go the same way as GNER, so I ask the Government to say this evening what they are doing to reduce the risk of any other franchisee going under during the downturn.
	The Government must, of course, honour the open-access agreements that have already been agreed—such as the one to Shrewsbury, which we heard about earlier. Grand Central, a York-based company, deserves a return on the investment it has made on a direct service from Sunderland, through intermediate stations, to York and then down to London. However, open-access services are not part of the strategic rail network, unlike franchises. During a downturn, the Government should give priority to the strategic railway, and when line capacity is short, it does not make sense to award a train path to a four or five-carriage open-access train when an eight-carriage franchise train could use the slot.
	I was a member of the Standing Committee that considered the 1993 Railways Bill. One of the key criticisms of privatisation was that it would lead to fragmentation, and that has been borne out in practice. We have a less integrated timetable now than we had before privatisation and that was a direct consequence of franchising. The problem has been exacerbated by open-access services.
	Since the Strategic Rail Authority was wound up, there is no office or agency with a strategic responsibility for timetabling. The basic objective of timetabling is to connect point A with point B, with a direct service if possible, and with the fewest number of changes where that is impossible, and for any changes that are necessary to be brisk. It is a simple principle that is used by timetablers in other European countries, but, sadly, not in our country.
	The Office of Rail Regulation says it is not its job to provide a timetable; its job is to adjudicate between applications from different operating companies for train slots. Yet its recent decisions on train paths on the east coast main line have enormous implications for the timetable. As a result of awarding additional paths to open-access operators, it has postponed the National Express East Coast franchise commitment to delivering five trains per hour as a standard pattern.
	My constituent, Jonathan Tyler, argues that the ORR decision is misguided. He has done so powerfully in two recent articles in  Modern Railways, and he advocates that the UK should adopt the same principles and timetabling tools used in other European countries. I ask my hon. Friend the Minister to look at the articles, or to get a brief from the official in his Department, Geoffrey Appleby, who is in charge of the rail utilisation strategy, about the proposals my constituent puts forward.
	Let me give just one example of how railway fragmentation gets in the way of timetabling. The passenger flow by railway between York and Leeds is broadly the same as that between Manchester and Liverpool or Edinburgh and Glasgow, and it needs four trains per hour. Three trains are run at 15-minute intervals by First TransPennine Express and the fourth train is run by CrossCountry, but its train runs in between two of those others and, consequently, there are four trains in half an hour and no trains for the next half hour. Over lunch today, the Secretary of State told me that he would look at these problems. I know that Mr. Tyler has been in correspondence with Lord Adonis, and I very much welcome the fact that the Secretary of State has said that he will look at this too—I shall write to him.
	The Government have a good story to tell on investment, and in an economic downturn investing in infrastructure is an effective way to create jobs and to get money flowing through into the wider economy. Franklin D. Roosevelt's new deal invested billions of dollars in public infrastructure. That lesson has been learned by Barack Obama and it should not be lost on our Government. I am glad that the Government have increased Network Rail's budget for track renewals over the next five years, but I am extremely concerned that Network Rail is planning to spend less next year on track renewals than it did this year. If it were to do so, that would make many skilled men redundant and the policy would fly in the face of everything the Government are saying about fighting the recession. I call on them to get Network Rail to think again.
	I welcome the Government's decision to invest £7.5 billion in new inter-city express trains. If the preferred bidder that they have identified is appointed, I hope that 75 per cent. of the value of the contract is spent in the United Kingdom. We are told that the assembly plant for these new carriages will employ 500 train builders. My hon. Friend the Member for South Derbyshire (Mr. Todd) has questioned whether the three preferred locations—Ashby de la Zouch, Sheffield and Gateshead—are the best places in which to build the trains. The Government should look closely at the location, and the Minister will not be at all surprised when I remind him that there is a perfectly good railway carriage factory in York. If the factory, which is currently used by Network Rail, is unavailable or deemed inappropriate, I should also remind him that the York central site, which abuts the York carriage works and has directly access to the railway, is one of the biggest industrial development sites in Europe and would be an ideal place for a new plant. I have already discussed this possibility with the York inward investment board, and I hope that we will be discussing the merits of York, among the other places, with officials in the Department.

Simon Burns: I welcome the opportunity to take part in this debate, because Chelmsford is a significant commuter town for journeys down to London. If one looks on the positive side, one can see that some significant improvements have been made over the past 20 years to the infrastructure and to the services provided to my constituents: in the late 1980s and early 1990s, a multi-million pound redevelopment and enhancement of Liverpool Street station took place; during the 1990s Chelmsford station was rebuilt and significantly improved; and, in addition, improvements have been made to the rolling stock. I recall that 20 years ago one could travel from Chelmsford to Liverpool Street during the day and although it might have been bright and sunny outside, the carriage windows were so dirty that one would have imagined it was late evening. That is a thing of the past, and we have seen real and significant improvements and investment.
	There are, however, downsides that my constituents have to put up with day in, day out, the first of which is significant overcrowding on the trains. Not only is it a safety problem but, to my mind, it is unacceptable that having paid through the nose through the fare structure for the service down to Liverpool Street, they all too often cannot find a seat during the rush hours in the morning and in the late afternoon and early evening. My solution would be to have longer trains with more carriages during that period to take the overcrowding and to ameliorate that problem. Too little is being done at the moment to solve the problem.
	The other issue of grave concern is rail fares. Because commuters are a captive audience it seems that there are significant increases in fares over and above the rate of inflation, so that the price of an annual season ticket for people going down to London to work makes up an exorbitant part of their salaries. Something has to be done to ensure that people get a fair deal and value for money and that they do not have to pay through the nose, year in, year out. It will be extremely interesting at the back end of this year and the beginning of next year to see what the annual increase in fares will be given the fact that the retail prices index, as opposed to the consumer prices index, is now at 0.1 per cent. on an annual basis—the first time that we have had that situation in living memory and beyond. The regulator and the powers that be that set the fares have to think again in this unusual time of extremely low inflation to ensure that hard-pressed commuters are not penalised once more and that they do not have to pay through the nose.
	The other issue that I want to raise tonight is the fact that, on environmental grounds, it would be sensible to build a new station on the outskirts of Chelmsford, somewhere between north Springfield and Boreham, to stop all those motorists who travel into Chelmsford to get the train into London when they do not live in Chelmsford. They come from the Dengie peninsula and from areas north of Chelmsford, up near Braintree and Witham and beyond. If they could go to a station there, that would relieve the traffic in the centre of the town and would provide a steadier and more responsible way of people getting on to and alighting from trains. That proposal is in the Chelmsford borough council structure plan. We can argue about and discuss exactly where a new station should be, but I welcome the fact that it is in the plans and that it is an accepted fact that it should come to pass.

Angela Smith: I welcome this debate. I want to concentrate principally on the issue of investment in high-speed rail networks, as did my hon. Friend the Member for Manchester, Blackley (Graham Stringer). To some extent, I want to make common cause with my friend from the other side of the Pennines, unusual though that may seem.
	It was good to hear recent announcements about the formation of the High Speed 2 company, and I am sure that we all await further statements on that topic with interest. Of course, anyone could be forgiven for finding it difficult to accept that further high-speed networks will be built until we actually see the relevant signatures on the dotted lines. To be honest, our country's history has, for decades, been one of short-term decisions at the expense of long-term investments. As Steve Richards of  The Guardian said recently, there has been a "perverse indifference" on the issue.
	However, the Government appear to be on the verge of doing something bold and exciting, and I can only urge our Ministers to stick with their instincts, and to deliver what it appears that they are promising to deliver as soon as they can. That we have moved to such a position is, in many ways, quite an achievement, given where we were only a short time ago. The Eddington report, for instance, argued that economic returns from high-speed rail in the UK were unlikely to be as large as returns on investments in alternative projects. Eddington argued that that was due to the compact geography of the UK and an extensive air network, among other things, but many disagreed with him, and their contributions to the debate have helped to lead us where we are today. Public opinion is more aligned towards the progressive position than it has been for some years, and recognises that it is right to challenge aviation as the principal means of travelling within the country. I support the third runway at Heathrow, but it is absolutely right that we challenge aviation and provide a greener alternative wherever we can.
	The Atkins report argued that the economic benefit to the UK of high-speed rail would be £63 billion, and the Commission for Integrated Transport made a significant contribution to the debate. The well-respected Professor David Begg argued that
	"shrinking journey times between main cities"
	was
	"essential if we are to deal with capacity constraints that are building up on our intercity network."
	That point was well made earlier by my hon. Friend the Member for Manchester, Blackley. In other words, the capacity that was apparent in the 1970s and 1980s has been soaked up.
	One option for dealing with the lack of capacity on the network would be to price passengers off the trains. It is clearly an option, and it may well be the chosen route of the train operators, but I believe, as do most progressive thinkers, that that would not be the right way forward. It would make much more sense to invest in new capacity and so free up capacity on our existing network. Given the increasing pressure on our highway network, would it not make much more sense to get more passengers and more freight off our roads and on to our trains? After all, as Professor Begg has pointed out, increasing congestion on our roads is leading to reductions in average travel speeds, and that, of course, has a negative impact on economic activity. Surely common sense, if nothing else, needs to prevail; we need to recognise that the only way out of the situation is to build more and—this is the key point—better railway capacity.
	The Northern Way is the other organisation that has made the case for high-speed networks for both the east and west. I now come to the point on which I do not entirely agree with my hon. Friend the Member for Manchester, Blackley. The Northern Way—a group of regional development agencies—argues that we need high-speed routes up the east and west coasts, linked by the trans-Pennine route. It predicts that such an investment would have an economic impact of £10 billion on the economy of the north.
	All in all, then, there is a powerful economic case for high-speed rail, which could help to rebalance our economy by encouraging the integration of our regional economies. As I pointed out in a debate in Westminster Hall the other week, we talk a lot nowadays about rebalancing our economy by developing our manufacturing base, but I believe strongly that we need to do so by considering not just whether we need more manufacturing and less of a financial services sector, but whether we develop the economy of the north and the rest of the country, and balance those regions with London and the south-east.
	However, the environmental case is powerful too, for only a reliable fast rail network offering a comfortable journey at a reasonable price will be able to compete against the car and the plane. I echo entirely the comments of my hon. Friend the Member for Carlisle (Mr. Martlew) about the inconsistencies and the difficulties experienced by passengers in getting the best deal on the trains, and the disincentive that the current fare structure presents for people who make a last-minute decision to hop on a train. They find it much easier to get in the car to make that journey, because the cost of travelling on the train at the last minute is prohibitively high.
	A modal shift is critical to our environmental and economic future, and I therefore call on Ministers to commit the Government to this vision for our rail network. Economically, socially and environmentally, that is the right thing to do. That vision should include in the first phase of High Speed 2 the reopening of the trans-Pennine link, preferably based, as everyone would expect me to say, on the reopening of the Woodhead line.
	The Woodhead line runs deep in the hearts of most railway commentators. I have had letters from up and down the country on that subject. It was the first line in the country to be electrified and it provides a fast link of just 35 minutes between Sheffield and Manchester. It would be the best option environmentally for a new trans-Pennine link because the environmental impact of reopening that line would be much less than that of building a brand new link between, say, Manchester and Sheffield, or elsewhere.
	There are other things that we need to do. Before we start investing in the high-speed network, we need, for instance, to sort out the logistical problems that dog Manchester's rail network. It might seem strange that a Member representing Sheffield should support Manchester in wanting to get its problems sorted, but the problems of Manchester impact on every major city in the north. We need the Manchester hub, and we need it quickly. Progress in the north cannot move forward much further until that is resolved.
	We need the electrification of lines such as the Great Western and midland main line, in order to bring cities such as Leicester, Derby and Sheffield closer to London as soon as possible. The journey takes 2 hours 7 minutes at best from Sheffield to London, but Sheffield is the UK's fourth largest city. We could bring the journey time below 2 hours, but there are still certain times of the day when it is more like 3 hours. We need to make progress in that respect.
	In conclusion, although I welcome many of the proposals to improve rail services in the medium to long term, there are many things that the Department for Transport can do in the short term. By improving the quality of stations and providing safety and disability access measures, we can improve the travelling experience for train passengers. I commend my right hon. Friend the Secretary of State for making available £35 million for such upgrades. I am delighted that upgrades are in the pipeline for stations on the much used Huddersfield to Sheffield line, which is one of those sardine tin lines that is packed for most of the time that the rolling stock is in operation. Investment is promised for Penistone, Silkstone Common and Dodworth. More of this type of short-term investment would be good for our railways and provide a useful stimulus to our ailing economy.
	Finally, with reference to Sheffield being shortlisted for the new inter-city rolling stock, it would be wrong to underestimate the city's history of railway component making and manufacturing, or its capacity to deliver that new stock.

Denis Murphy: I will be as brief as I can. As part of the argument for an expansion of the rail network, I draw attention to the Ashington, Blyth and Tyne railway line, which is a fully maintained, operational, mostly double-track freight line that last saw regular passenger services in the 1960s. It forms an important part of our regional network. The main trunk runs from Newcastle through Northumberland Park, which has a Metro station connection, then to Seghill, Seaton Delaval, Newsham—for Blyth—Bebside, Bedlington and Ashington. There is a further branch, which runs from Bedlington, through Choppington, connecting back to the east coast main line at Morpeth. There are other freight branches to the Alcan aluminium smelter and the port of Blyth.
	Supported by other funding partners, the North East assembly has already completed a technical report into restoring passenger rail services on the line. The report concluded that there would be a one-off cost of £4.1 million and an annual operating subsidy of only £50,000 per annum for an hourly service to Newcastle until early evening—or of £100,000 per annum for a half-hourly service until midnight, which is our preferred option. No extra rolling stock would be required as, instead of waiting 30 minutes at Morpeth, the train would continue along the line to Bedlington. That would double the train frequency and provide a service until midnight for both Cramlington and Morpeth.
	The proposal to open the main section of Ashington to Newcastle via Northumberland Park was the subject of a technical study funded by Nexus. It concluded that an hourly service was easily achievable in addition to existing freight traffic. The study did not examine capital costs, revenue or operating costs, but as Ashington is a much larger community than Bedlington and its station is in a prime town centre position, it can be assumed that patronage and revenues would be much higher if Ashington were included.
	A Network Rail guide to railway investment projects 3 study, or GRIP 3 study, into restoring passenger rail services from the Metro centre outside Newcastle into Ashington has just started. At the same time, a freight operator has requested a study into significantly increasing freight movement on that line. A new coal-fired power station is proposed for north Blyth; it would require 6 million tonnes of coal per year and approximately 3 million tonnes of that would come in on the rail line.
	I conclude by asking the Minister to consider the request to reopen the railway to passenger rail services and by informing the House that my right hon. Friend the Secretary of State has agreed to visit Ashington and Bedlington to see for himself the benefits that that would bring.

Kelvin Hopkins: I am very short of time, so I cannot do justice to my theme of rail freight. I strongly believe that we need heavy investment in dedicated rail freight and in infrastructure linking the channel tunnel to Glasgow. With colleagues from the rail and haulage industries, I have been supporting the EuroRail freight route scheme for some time. We have a detailed, worked-out scheme, and I am glad to say that we have put it directly to the Secretary of State and the Minister with responsibility for railways. They know the detail.
	I want to emphasise that the issue of rail freight is underplayed by the Government. The rail White Paper allocated only £200 million for rail freight over a five-year period. That is a tiny amount of money—just one eightieth of the proposed spending on Crossrail, one fortieth of what has been spent on west coast main line modernisation and half of what will be spent on modernising Birmingham New Street station. It is a tiny amount, and the Government are not taking rail freight seriously.
	If we want those major economic regions in Scotland, the north and the midlands to be linked to the continent of Europe, a dedicated rail freight line going through the channel tunnel to those regions is vital. The existing routes cannot take double-stack containers and most cannot take full-size containers. They cannot take lorries on trains. They will not be used by hauliers without regular services accessible through terminals close to motorways; hauliers could load their lorries and get them delivered to Dortmund, Rome or wherever the next day. That is what we need and we have to invest in it.
	We estimate that our detailed scheme would cost £4 billion—a tiny fraction of what would be spent on a high-speed passenger service and of what is being spent on many other schemes. I would have liked much longer to speak about the scheme. I have just touched on it, but I hope that the Minister will take note.

Stephen Hammond: On 12 February, we spent a full three hours in Westminster Hall debating the Select Committee's report, when several interesting points were put to the Minister—some of which have been reiterated tonight—and several questions were asked of him. I hope that he might answer some of those in his speech. Tonight we have had the chance to range a little more widely.
	Let me start with the question put to the Minister by my right hon. Friend the Member for Wokingham (Mr. Redwood). The estimates book states that £7.5 billion out of the total £23.5 billion relates to financial instruments. Does that not create a huge risk? I understand that these estimates involve Government guarantees against London and Continental Railways, Network Rail debt issuance and the Air Travel Trust fund. To enable the House to assess the risks attached, can the Minister confirm when those guarantees were put in place, for how long they will extend, and what risk analysis has been undertaken; and will he put into the Library the probability analysis that was undertaken by the Department prior to making a risk assessment?
	I want to refer to the White Paper, "Delivering a Sustainable Railway". It is unfortunate, to say the least, that less than two years since the publication of that so-called 30-year strategy, it is already out of date and falling to pieces. It is no wonder that the Select Committee concluded that
	"the Government should seek to develop a genuine 30-year rail strategy",
	for the document that they produced is clearly not that. At the time of its publication, it was rightly lambasted by all industry experts for its lack of vision and detachment from reality. Where does one start? It was over-hyped by the then Secretary of State; it has ultimately proved to be visionless; and although the high-level output specification contained many good things, they were, like so much from this Government, recycled or double counted, and the new things have yet to materialise.
	So what, in reality, did the White Paper contain? There was the re-announcement of Birmingham New Street and Reading, there was £100 million for all station improvements outside London, and there were the much-vaunted 1,300 carriages, which went from being "new" to "extra" carriages, and all of which had been announced by the two Secretaries of State prior to the Secretary of State at that time. Quotations about "Delivering a Sustainable Railway" include:
	"The level of ambition is too modest";
	"We urge the Government to be bolder";
	"It is deeply disappointing the Government dodged";
	"Hesitation means years of avoidable misery";
	and
	"The white paper dismisses electrification too easily".
	Those are not my words—they come from the Select Committee report. In the end, one is forced to conclude that the Government's 30-year strategy was an expensive waste of paper and printing.
	In the less than two years since the strategy was produced, it has been seen to be wanting. The White Paper's dismissal of high-speed rail and electrification has been rendered obsolete by the Government's U-turns. On high-speed rail, the new Minister of State has clearly reversed the catastrophic opposition of the then Secretary of State. It is a shame that the Government's plans for high-speed rail are rather less extensive than those announced by the Conservatives. The plans are so far uncosted, and we do not know where the trains are going to start from or go to.

Stephen Hammond: Indeed I do. The fact that no civil servants were looking at high-speed rail was confirmed by the then Minister responsible for rail, the hon. Member for Glasgow, South (Mr. Harris). My hon. Friend's point is absolutely accurate, and like him I might conclude that the Government have finally joined us in our far-sighted policy.
	The capacity shortage on the network should be the top priority for the industry. The Government's attempts to tackle the shortage have been misguided and totally inadequate, which was borne out by the evidence taken by the Select Committee. In its report, the Committee said that it was concerned that the Government were failing to deal with the concerns of the industry. It recommended that the Department revise its method of costing rail patronage, and it said that the Government's approach to increasing rail capacity is over-cautious. That may be one word for it, but I bet that the commuters from the constituency of my hon. Friend the Member for West Chelmsford (Mr. Burns), of whose struggle he spoke so eloquently, do not use the word "over-cautious". A stronger, more unified strategy for tackling overcrowding and keeping costs down is urgently required. That will help to take the pressure off rising fares, and more importantly, it would drive better value for money for the fare payer, the taxpayer and the traveller.
	Hon. Members have raised a number of points tonight, but we have spent a lot of time listening to comments about the extra carriages, which are clearly the key to delivering extra capacity in the short term. The high-level output specification outlined 1,300 extra carriages, and we would welcome that. But are they new? How many of them are new? How many are cascaded? How many of them have actually been ordered? Will Thameslink phase 1 be delayed? How many carriages will be delivered and when? The process is close to a shambles.
	On 12 February, the Under-Secretary of State for Transport, the hon. Member for Gillingham (Paul Clark) said that all of the carriages would be in operation by 2014, but let me illustrate the shambles that the Government have made of this matter. Last week, I had a response to a written question to the Secretary of State. I asked him the timetable for ordering the remaining 877 carriages, which were referred to in the 2007 White Paper. Some 423 have so far been ordered. I was told in the answer that the new train orders will be placed as follows: 120 for National Express East Anglia, 88 for London Midland, 202 for GoCo, 140 for South West Trains and up to 1,300 for Thameslink. That is all very well, and superficially that answer might sound sensible. However, the Minister will remember that his predecessor told us that the Thameslink vehicles were not part of HLOS. When I asked the Minister about the 877 vehicles that had not been ordered, he detailed only 550. According to the rolling stock plan, South West Trains was to have only 105, not the 140 specified in that answer, so perhaps the Minister would care to tell us which is correct, his answer or the rolling stock plan. As the hon. Member for Southport (Dr. Pugh) said, there has also been a change in the rolling stock plan for the vehicles that were due to go to Northern Rail.
	Will the Minister clarify which of the class 323 carriages will be new and which will be cascaded, and to which operators? I still do not believe that anyone knows what the promise of 1,300 carriages really means. Even by the Department for Transport's lamentably low standards of responses to questions, the one that I have mentioned must be regarded as inadequate and poor.
	The shambles is further highlighted by an answer that the noble Lord Adonis gave. He stated:
	"The Department for Transport does not determine the amount of rolling stock for First Great Western...or any other train operator."—[ Official Report, House of Lords, 4 November 2008; Vol. 705, c. WA43.]
	That is palpably absurd, because the Under-Secretary of State for Transport, the hon. Member for Gillingham, gave me a written answer that contradicts it. It is nonsense also because the Department now has an updated rolling stock plan which, as Lord Adonis concluded in the same answer, envisages an extra 52 carriages for First Great Western. In one sentence he said that the Government did not intend to tell any operator where carriages should go or how many they should have, and later in the answer he told us exactly how many First Great Western would have. The DFT is controlling procurement, and it is doing so shambolically. Will the Minister clarify exactly where all the carriages have gone?
	A number of contributions to the debate have been about the inter-city express programme. The Minister might at least explain something about that. When the Secretary of State announced the IEP, he talked about the 12,500 jobs that would be safeguarded or created. Hitachi has confirmed that its initial investment in the United Kingdom will create 200 jobs, which is likely to rise to 500. To be generous, there might be 2,000 maintenance jobs. That makes 2,500 of the 12,500. When my hon. Friend the Member for Chipping Barnet asked the Secretary of State on 12 February whether he could explain where the other 10,000 would come from and how many of them would actually be created or safeguarded, there was no answer. The suspicion across the House and among the railway commentariat is that, like so much of the Government's policy, those 10,000 jobs are actually just another incidence of double counting.
	There have been speeches about high-speed rail in the debate. For far too long it was absolutely clear that the Government had no interest in high-speed rail. When the right hon. Member for Bolton, West (Ruth Kelly) was Secretary of State, she said that it was "risky and expensive" and would not help to meet passenger demand. That was clearly seen to be wrong, and how things have changed, led by the Conservatives' innovative announcement last week. I am pleased to see that the Government have finally seen the light, and I welcome the fact that the hon. Member for Manchester, Blackley (Graham Stringer) has been converted to our policy and supports the Conservative party's plans for high-speed rail to be built, in phase 1, from London to Birmingham, Manchester and Leeds, and then in later phases across the whole country.
	Tonight, we have had the chance to examine, all too briefly, some of the Government's plans for the railways. Their 30-year rail strategy has been proved palpably inadequate, the Competition Commission's findings about their rolling stock procurement policy have been scathing and there have been major failings in Network Rail that we have not had the chance to touch on. The Government's policy towards rail is both shambolic and ill-prepared.

Paul Clark: We have had a wide-ranging debate, with substantial contributions from many hon. Members. However, it is interesting that, at the outset of his speech, the hon. Member for Wimbledon (Stephen Hammond) could not bring himself to acknowledge the work of the Transport Committee or to congratulate my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) on her work as Chair. I would like to put my congratulations to her on the record.
	Contributions included bids for additional funding in several different ways and bids for investment in specific constituencies, which is understandable. Some contributions frankly disregarded any changes in the past 10 years or any improvements to our rail system.
	We all know that good transport networks are essential to people's everyday lives and to the health of the UK economy. That remains true, especially in today's challenging economic conditions. That is why the Government remain committed to substantial investment in our transport system.
	We have therefore led and promoted several major long-term infrastructure projects, which will provide a major boost to our economy. We are investing £15 billion between 2009 and 2014 to increase capacity for up to 183 million passengers a year. For the long term, our aim is a rail network that can carry double the current number of passengers.
	However, in spite of the record investment, people's increasing demand for travel means that in many places, our transport infrastructure is operating at, or near capacity. We need not only to address the problem, but to do so in an environmentally sustainable manner.
	Rail already has an impressive and established record of being a highly sustainable form of transport. Carbon emissions from rail are around a third of those for road transport. Electric trains in particular are not only cheaper to operate than diesels, but emit far less carbon. That is one reason for the further work on the case for electrifying the busiest parts of our network, including the Great Western main line and the midland main line, with decisions to be announced later this year.
	Some hon. Members referred to times gone by. Thirty years ago, the railway was being written off as an expensive, outdated and declining mode of transport. Times change—thanks to the substantial investment that we have made, Britain's railways have enjoyed a spectacular renaissance.
	Some hon. Members claimed that the railways had improved because of privatisation. I well remember in 1997 that the railway lines in my neck of the woods suffered from gross under-investment, were unreliable and had rolling stock from the 1960s and 1970s.  [Interruption. ] That is not nonsense.
	Our rail network now carries more people and more freight than at any time in the past 50 years, and performance continues to improve. In the past year, 90.8 per cent. of passenger trains arrived on time. It is important that that improvement continues. The Government have, therefore, specified an improvement in reliability to 92.6 per cent. by 2014. In addition, we are specifying 25 per cent. reductions in delays of more than 30 minutes.
	As I said, passenger numbers have grown around 40 per cent in the past 10 years. That is why we are going to such lengths to upgrade existing track. We want to tackle the major problems that we identified for the control period to 2014: overcrowding and capacity. That is our main focus between now and 2014, and that is why we have upgraded the existing track, such as on the west coast main line, as well as investing in new trains.  [ Interruption. ] I will come shortly to the number of carriages, which was raised by the hon. Member for Wimbledon and others.
	We are investing £5.5 billion in the Thameslink scheme, which will deliver greater frequency and capacity across London services and more than 14,000 more seats on some of the most congested routes in London. Crossrail will give commuters to the east and west of London direct access to the heart of the capital and mean that 1.5 million more people will be within an hour of London's business centres.
	Some 1,300 extra carriages are to come into service between now and 2014. The hon. Member for Lewes (Norman Baker) referred to the grotesque shortage of rolling stock, as did the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski). Those 1,300 extra carriages will go to some of the areas suffering from the worst overcrowding; indeed, 423 additional carriages have already been ordered, before the control period has even started. That is a sign of the Government's decision to press on with procurement. All those carriages will be in place by 2014.
	I can confirm that the 423 new carriages to be delivered between 2009 and 2011 will be distributed as follows: 92 to Southern; 217 to London Midland; eight to Chiltern; and 106 to Virgin West Coast. That means that 423 have already been ordered. Invitations to tender have been issued for a further 320 vehicles and officials are currently in commercial discussions with train operating companies to secure the remainder, after which we will announce where those additional carriages will go.

Paul Clark: I will not give way, because I want to cover the points raised by other hon. Members.
	My hon. Friend the Member for South Derbyshire (Mr. Todd) mentioned the Intercity Express programme, as did the hon. Member for Lewes and others, including the Chair of the Select Committee. We have set out a £7.5 billion investment programme to replace the existing, ageing inter-city trains. The benefit for passengers will be substantial, with more 21 per cent. more seats available on longer trains and shorter journeys. Typically, the journey time will be shortened between London and Leeds by 10 minutes, between London and Edinburgh by 12 minutes and between London and Bristol by 10 minutes.
	I am delighted that Hitachi has committed to build a new manufacturing plant here in the UK; indeed, I have heard the bids from my hon. Friends the Members for City of York (Hugh Bayley) and for Sheffield, Hillsborough (Ms Smith) and others. We will ensure that those commitments are delivered as soon as possible. However, I would say to right hon. and hon. Members that safeguarding jobs is as important as getting new jobs. It is important that we ensure that those jobs remain. It is not a question of the Government micro-managing the process, because there is substantial work to be done, never mind the long time that it takes to design and deliver the programme. Indeed, the trains will be used by a number of different operators.
	I note that the representative from Unite, Bob Rixham, who had met Hitachi's European chief, said:
	"The undertakings Hitachi have given mean they are here for the long term and, if so, we would be crackers not to welcome a second big player in train manufacturing in Britain."
	That is an important point to bear in mind. The evaluation of the bids was based on an assessment of compliance, delivery and value for money. Those criteria were published on the DFT's website. Of course, the content of the bids remains commercially confidential.
	On investment, a new rail line beginning in London and going to the west midlands, approaching London via a Heathrow international interchange, creates the potential for faster journeys to the north and Scotland. That is why we have set up a new company—High Speed 2—to consider all the options and possibilities, recognising the need to move forward beyond 2014.
	My hon. Friends the Members for Luton, North (Kelvin Hopkins) and for Carlisle (Mr. Martlew) spoke about rail freight, to which we remain committed. In the past 10 years, the amount of freight carried by rail has increased by some 60 per cent., with goods such as drinks and groceries now being carried by rail alongside the traditional fare of bulk loads such as coal and aggregates. We are planning £200 million for the strategic rail freight network, which will be capable of handling more and longer trains. The campaign by my hon. Friend the Member for Luton, North for a dedicated rail freight line is well known.
	The Transport Committee dealt in some detail with the engineering works over the new year in 2008. Network Rail is accountable to its members for its performance against its business plan, and to the independent Office of Rail Regulation.

USE OF CHAMBER (UNITED KINGDOM YOUTH PARLIAMENT)

Gordon Banks: I am grateful for the opportunity to debate an industry that was such an integral part of my life before I entered the House. The debate is long overdue and it is with a sense of sadness that I feel it necessary to highlight the continuing dire state of the UK construction and housing industry. I declare an interest as I remain a director of a building supply company and have worked in the construction and housing industry for more than 30 years in various roles.
	The construction industry has more than 250,000 businesses employing more than 2 million people in the UK and has a turnover of about £6 billion a year. We have the second largest industry output in the European Union and we all know and appreciate the role played by infrastructure in the UK's progress in recent years.
	That is not the only story, however. There are vital subsets to the construction industry: for example, construction product companies have an annual turnover of more than £40 billion and employ more than 650,000 people in more than 30,000 companies. In Scotland, almost 12 per cent. of the work force are employed in construction and building-related activities, and further decline would have a profound impact on Scotland in general.
	Last July, I wrote to both the Prime Minister and the Chancellor of the Exchequer to outline my concerns about the perilous state of the UK housing and construction industry. Sadly, those concerns have turned into reality; they are still with us today and there is little sign of improvement. It is important to understand that the housing industry has always built speculatively and not to order. Only by speculation can businesses provide continuous employment. The situation is little different from that of the car market, where mass production is not to order. In the housing industry, such speculation has stopped. The sector has lost jobs at an alarming rate, affecting the supply side, design and manufacture, road haulage and even council planning departments.
	Past downturns have been different from that which we experience today. In Scotland, the industry has not experienced the highs seen in the south of England, but to some extent it has not experienced the same lows either. Arguably, that put Scotland in an advantageous position as part of the UK, as the situation was less volatile and a little more predictable, but not this time. The whole developed world has suffered a financial earthquake simultaneously, and no one was prepared. Almost overnight, credit lines were stopped. Major developers such as Barratt, Taylor Wimpey and Persimmon cut jobs as early as last summer. Speculative house building is virtually dead. Moreover, stock of completed housing units is reducing in value, and land values are plummeting.
	The construction industry is vital in delivering our new infrastructure. If there is no construction industry, there is no new infrastructure. There is a huge threat to the future of the construction industry, especially the housing industry, in the UK. Private finance initiatives or public-private partnership contracts created a boost to the construction sector, with schools and hospitals the length and breadth of the UK being improved or newly built. The importance of public spending in a recession therefore becomes even more crucial. With the Scottish Executive delaying the process in search of a new name for PPP or PFI, however, there will not be a continuous flow of contracts in Scotland. That will not only harm the industry but delay the modernisation of our public estate.
	On a wider scale, we need the new buildings, roads, railways and stations to remain competitive. Infrastructure is the key consideration for businesses when they want to relocate. In Clackmannanshire in my constituency, towns such as Alloa have been opened up with the construction of the eastern approach road, the reopening of the railway link to Stirling, and the construction of the Clackmannanshire bridge. The last batch of Labour's approved contracts are nearing completion, and Scottish construction companies look into the void in search of the next project, more in despair than hope. Government action is important in all areas of the UK, and spending from this Parliament is still strong. But we need clarity on the new projects being brought forward, and action is demanded in Scotland, not political posturing.
	Although there is a huge responsibility on Government shoulders to bring forward infrastructure projects, responsibility also falls on the banks to lend at reasonable rates. That lending is required to allow developers to create the infrastructure that our economy will need to rebuild after the downturn, both to allow us to compete and to provide the housing and social environments that the country needs. Reasonable lending is not 7 per cent. above base rate, but that is becoming the norm. Lenders can make any deal competitive if they are all offering it, but that does not make it morally or financially right.
	Of equal importance, funding is required for potential home buyers. We need to be much bolder in our action and force all the banks to lend again at reasonable rates to encourage spending. I urge Ministers to look again at recommendations to intervene in the mortgage market by guaranteeing £100 billion of mortgage-backed securities this year and next. Perhaps that will be part of the Chancellor's Budget next month; my hon. Friend the Economic Secretary can take that back to the Chancellor as part of my shopping list from tonight.
	I want to spend another minute or two on mortgages. First, on deposits—or in sector speak, loan to value—not long ago the financial sector was offering mortgages of 100, 110 and 120 per cent. of the value of properties. It is still possible today to get a 100 per cent. mortgage. Plainly, that was and is madness. Lest anyone think that I absolve the individuals from responsibility, I do not. Individuals who used such vehicles have a responsibility, but so does the financial sector. We did not ask the financial sector to create such products; it created them and offered them to individuals on the clear understanding that lenders were content that individuals could afford them.
	In general, however, that madness has now gone full circle. Most products now demand a large deposit: 20, 25 or 30 per cent. Why? Could it be that the lenders really have individuals' best interests at heart, and want to ensure that we can all cope with our repayments? I do not think so. If those were the banks' true concerns, they would help by passing on the full falls in interest rates that have been generated recently. I believe that they are protecting their own backs against possible further falls in house values. However, for the industry the solution is simple. We must return to widely available 90 per cent. mortgages if we are to have any hope of saving the industry.
	We have all seen and, I hope, welcomed the recent commitments from Northern Rock, the Royal Bank of Scotland and, last week, Lloyds Banking Group to increasing their home lending this year and next, but it really is a case of "Increase it from what?". Northern Rock is to increase lending by £14 billion over the next two years. RBS and Lloyds are to increase theirs by £9 billion and £6 billion respectively over the same period. That is a total of £29 billion over two years. Let me put that into perspective.
	According to the Royal Institution of Chartered Surveyors, new home-buying inquiries are at their highest level since October 2006, yet the number of home purchase loans fell to 516,000 in 2008— their lowest level since 1974—down 49 per cent. on 2000. In January 2009, total mortgage lending was estimated at £12.4 billion for that month. It may be said that that is quite a sum, but it is 52 per cent. less than the figure for January 2008, which was about £25 billion. The commitment of £29 billion over two years is arguably needed over a single month.
	Sadly, we have not yet seen any move in the sector to affordable loans demanding, say, 10 per cent. deposits filtering through to the consumer. Quite the contrary, indeed. There are 1,398 different mortgage deals available today, but two thirds of them demand a minimum 25 per cent. deposit, and the number demanding a 15 per cent. deposit has risen by nearly 8 per cent. in the last month alone. Deals demanding 10 per cent. deposits are becoming scarcer rather than more available: 101 deals are on offer, compared with 120 last month and nearly 1,200 a year ago. The deals that are available for 10 per cent. depositors carry a penalty. They have an average fixed rate of 6.31 per cent.—whereas someone with a 40 per cent. deposit can secure an average rate of 4.84 per cent.—and they are often subject to significant arrangement fees, which are very clever marketing tools not to sell a product. Let me pose a question to my hon. Friend the Minister. What can he do about a state-funded lender such as HBOS, which since the first quarter of this year will lend only 80 per cent. of the value of any new-build property?
	Ninety per cent. mortgages will help the housing sector, but it does not stop there. When people buy new cars, what do they do? Nothing other than put fuel in them and drive them, which is what they did with their old cars. People who buy new houses spend additional money. Any high street retailer will confirm that a buoyant housing market, new or second-hand, fuels spending on the high street. New home owners buy carpets, fixtures and fittings, curtains, white goods, furniture and so on. It is the only industry of which I am aware that directly feeds spending in other sectors.
	Here is an interesting figure. In 2007, there were 357,800 first-time buyers. The Halifax has produced data suggesting that the cost of furnishing and equipping a new property is around £6,000, which equates to about £2.14 billion of high street spending by first-time buyers alone. That, to my mind, is quite a fiscal stimulus, but we need to get people into those homes to trigger such a stimulus.
	As I said earlier, there is still a huge demand for housing, social and private. Nearly 500,000 people in Scotland are on local authority and housing association waiting lists for affordable homes, and with Scotland needing an extra 17,000 houses per year to meet rising demand, the mortgage situation is bound to have a serious impact. While I give the Government the benefit of the doubt when it comes to whether they grasp the importance of the home-buyer's effect on the high street, the banks have moved from one extreme to the other.
	Shared equity schemes are valuable and have a role to play, and the home buy direct programme will, I hope, be of significant help, but such schemes depend on how the lender views the share. If a 30 per cent. state-funded and industry-funded shared equity scheme is available, it is no good for the lender to demand a 25 per cent. deposit on the remaining 70 per cent.; that defeats the purpose. I acknowledge the steps taken to extend the Government's shared ownership programme and the £270 million being allocated through the Housing Corporation—and the new clearing house with £200 million to allow developers to sell unsold stock for use as affordable housing is to be applauded when it delivers genuine results.
	The industry itself has many shared equity schemes, and I am advised of one developer whose company held £1 million of shared equity. Obviously, there was a need to turn that into capital, but when the markets were approached, the best offer he got was £400,000. Why? Because the markets said it would be worth £1 million in 10 years' time, but not today. The truly sad thing was that he was thinking about taking that offer.
	I would like my hon. Friend the Minister to take away another point for the Chancellor. We could invest in building 100,000 new social rented homes over the next two years, with an investment of £6.4 billion, which could be a tool to offset some of the intransigence of the banks, providing it is Government-driven.
	I would like to talk briefly about training as well. The Government have a target to increase the number of apprenticeships in the UK, and similar plans were secured by Scottish Labour during the recent budget process in Holyrood. However, many of these apprenticeship targets are earmarked for the construction industry, and if we do not support the industry, there will be no point in having a construction and related trade apprenticeships scheme in an industry with no work.
	Negotiating planning procedures and processes takes time, and it may be one or two years before planning permission is granted and construction workers are on site. This will be too late for many construction companies. I would therefore be grateful if the Minister would expand on when Departments will be issuing detailed plans of all construction projects that are being brought forward on a constituency-by-constituency basis. While these companies tighten their belts simply to survive, there is little spare capacity to develop new products such as more effective insulation techniques, which can help us to meet our climate change objectives.
	There are real threats to other Government objectives, too. Without support for the housing industry, the Government can wave goodbye to any meaningful progress on their target for zero-carbon housing in 2016. This initiative was not particularly welcomed with open arms by the industry in the first place, and there is still a struggle to achieve an appropriate definition, but if the Government do not step into the mortgage market with an underwriting guarantee or pressure to increase lending adequately, the lack of finance in the industry will make zero-carbon housing a dream, not an aspiration. It is not only the house builders that we need on board to meet these targets; we need the product manufacturers on board, too. These businesses need profit and investment to develop these products, and product development is currently not high on the list of priorities, but survival is.
	What makes the housing and construction industry so vital and in need of support and of being moved up the list of endangered species? I have already talked about the benefits to the high street, but another advantage is related to imports. Only 15 per cent. of construction products are imported, and they make up only about 6 per cent. of the total turnover, so there would be a far better return for the UK economy than expenditure on a wider range of consumer goods.
	I urge the Government to be bolder on VAT. They could reduce it to 5 per cent. on home extensions, repairs and maintenance. That would motivate home owners to invest, and provide real jobs in the industry. This was supported by UK MEPs of all major persuasions only last month. Individuals with private capital are simply not investing in the industry, and we need to change that.
	The value of the housing and construction industry is massive. The skyline of this city—and, indeed, of this very building—displays an array of structures that showcase the talents, creativity and passion of the UK construction industry past and present. However, as well as the aesthetic achievements of the industry, there is a background of stable and valuable employment, which I am proud to say has supported many families, including my own, for a great many years. If we want to prevent its collapse, we need continued strong action now.

Ian Pearson: I congratulate my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks) on securing this debate on a subject that we both agree is important. First, may I say that one of the biggest single acts that the Government can perform to help the construction industry and reinvigorate the housing market is to restore confidence and stability in the financial markets and to support the economy by increasing lending? That is why the actions that we took in October on the recapitalisation of the banks, those we announced in January on the asset protection scheme, whereby we provided guarantees to the Royal Bank of Scotland group, and today's announcement on Lloyds are providing real support to the banking system to ensure that continuance of lending in the economy.
	My hon. Friend raises the important point about the availability of mortgages, and I agree that it is key to restoring the housing market. As he rightly points out, the underlying demand for housing is there, but one of the biggest problems is the availability of finance. That is why the Government recently announced that Northern Rock will increase mortgage lending by up to £14 billion over the next two years and why we have seen the other announcements that he mentioned. The new lending will be made available on commercial terms to ensure that it represents good value for money for the taxpayer, and Northern Rock will return to the mortgage market after an absence. The Government have made it clear that we want to see a mortgage market that functions well, where lenders lend responsibly and borrowers have access to a wide range of mortgages that they can afford to repay: a return to responsible lending and responsible borrowing. He will be aware that we are monitoring bank lending very closely, with data being collated by the monitoring panel that we have established. I share his ambition to see more 90 per cent. loan-to-value mortgages being offered. He is right to say that a big readjustment has taken place over the past six months in that respect. There are 90 per cent. LTV mortgages available at the moment from a number of lenders, as he rightly points out, but particularly for first-time house buyers we need to consider whether we can do more to help them at the appropriate time of their choosing to get their foot on the housing ladder.
	We also have to think about whether we want to do more to stimulate the private rented sector of the UK economy, too. It is clear that there is, and that there will continue to be, a strong demand for new homes in this country. My hon. Friend is right, too, to point out the benefits for the UK high street of the purchases that come when people move into new homes.
	The construction industry is vital to the UK economy. In 2006, it accounted for nearly 9 per cent. of gross value added worth more than £100 billion. The importance of construction to the Government and society goes beyond its economic contribution. Construction is vital for the provision of good quality public services and it plays a role in the delivery of more than half the 30 public service agreements set out in the 2007 comprehensive spending review. The sector is large, with recent employment levels exceeding 2 million people, and it contains some 284,000 firms. Although small and medium-sized companies predominate, the sector ranges from large international contractors to the self-employed jobbing builder and decorator.
	As a Government, we appreciate the fact that good quality housing is a basic human need and we are fully committed to it. By 2010, 95 per cent. of all social housing will meet the decent homes standard for housing that meets basic minimum quality standards. Furthermore, the Government acknowledge that there is a significant gap between the supply and the rising demand for new homes. For decades, the housing market has failed to keep up with our ageing and growing population. That has led to significant problems of affordability, particularly, as I have mentioned, for those seeking to buy their first home.
	First-time home buyers are key to the housing market. That is why we have set out an ambitious target to deliver 240,000 additional homes a year by 2016. In recent years, the housing market had responded to that challenge with the delivery of 207,500 additional homes in 2007-08. However, we recognise the reality of the recession and how it has hit the housing market badly. The capital constraints on private sector developers have been significant and the economic conditions facing the housing sector are far worse than those facing any other subsector in the construction industry.
	We recognise the need to take action and, as my hon. Friend will be aware, we are bringing forward public expenditure. Some £775 million was earmarked in the pre-Budget report to be spent on housing and regeneration investment. Some £250 million will be spent on the decent homes programmes to fund improvements in energy efficiency in 25,000 social homes. Some £150 million will be spent on new social rented homes, in addition to the £400 million to be spent on 5,500 new social homes that was announced last September.
	We are committed to a major increase in affordable and social housing to meet demand and to cut waiting lists. Local authorities with existing stock will be able to apply for grants to buy social housing alongside registered social landlords. As my hon. Friend mentioned, HomeBuy Direct's £300 million shared equity scheme will help up to 10,000 first-time buyers into affordable home ownership over the next two years. As with other homebuy schemes, any first-time buyers whose household income is under £60,000 will be able to apply. That will not only help first-time buyers, but support the industry by identifying buyers for its new homes.
	Of course, in addition to our desire to restore confidence in the banking system and to see further new house building in the UK, there is another factor: the Government are themselves a significant client, through public sector procurement, of infrastructure, and my hon. Friend the Member for Ochil and South Perthshire rightly mentioned that that was of significance. Some 30 per cent. of all construction activity is publicly funded, with a further 10 per cent. accounted for by the private finance initiative and similar schemes.
	As the House will be aware, the Government recently announced measures to safeguard PFI projects that were unable to access credit because of the financial crisis. Our action will ensure that public sector investments in infrastructure projects, including schools, transport and waste treatment projects, can be protected and will proceed. We are also bringing forward billions of pounds of infrastructure project spending right across the UK to help to keep people and firms in work while private demand falls. Projects include: increasing the capacity in the motorway network; improving and building new social housing; renewing primary and secondary schools; and investing in energy efficiency measures. The challenge, of course, is to make sure that we deliver on those commitments, and the Government are determined to do so. It is also a challenge to see whether there is more that we can do in these difficult economic times to help people and businesses in the construction industry.
	My hon. Friend also mentioned planning issues. He asked me about the detailed delivery plans to ensure that the money that we have announced will be spent. I can inform him that planning is well advanced, and the Department for Children, Schools and Families announced on 3 March which local authorities will receive the £499 million in additional money next year to invest in our schools. The Department is also bringing forward £390 million of the money that head teachers receive directly, and £30 million for investment in play facilities.
	My hon. Friend the Member for Glenrothes (Lindsay Roy) raised the issue of planning. He pointed to the lack of strategic intervention in some of the areas with which he is familiar. I agree with him that all partners need to work together to ensure that we can remove barriers and blockages, particularly during these difficult economic times, so that projects go ahead. He mentioned the Scottish Futures Trust, which is a matter for the Scottish Parliament and the Scottish Administration, but I am aware of the concerns that he expresses. My hon. Friend the Member for Ochil and South Perthshire mentioned training and VAT issues; I agree with him about the importance of training and maintaining skills in the construction industry sector. I have noted his request on VAT, and it will form part of our Budget deliberations, no doubt.
	To conclude, it is vital that we continue to be in close touch with the industry. We meet regularly with the Strategic Forum for Construction, which includes umbrella bodies from across the construction industry. I will be attending a meeting of the forum this month to discuss issues of common interest in the current climate. I think that—
	 House adjourned without Question put (Standing Order No. 9(7)).